Petronas Sells Cairn India Stake for $2.1B

Petronas Sells Cairn India Stake for $2.1B

Tuesday, April 19, 2011
Dow Jones Newswires
by Ankur Relia, Raghavendra Upadhyaya & Eric Yep

Malaysia's Petroliam Nasional Berhad, or Petronas, Tuesday said it exited Cairn India by selling its entire 14.94% stake in the oil and gas explorer for about $2.1 billion.

Petronas held 283.4 million shares in the Indian unit of Cairn through its overseas arm Petronas International Corp.

"The transaction brings to a close a successful association as a shareholder with Cairn India since 2006," Petronas said in a statement.

Petronas had raised its holding in Cairn India to 14.94% in 2009-10 after acquiring a 2.3% stake from Cairn Energy.

Petronas didn't reveal the names of the buyers but a person with knowledge of the matter told Dow Jones Newswires that the stake was sold to India-focused miner Vedanta and institutional investors in India via block deals.

Bank of America Merrill Lynch was the sole adviser on the deal, said the person, who declined to be named.

The stake sale by Petronas brings Vedanta closer to its goal of acquiring a majority stake in Cairn India as analysts don't expect a big response to Vedanta's open offer. Petronas' sale may also allow Edinburgh-based explorer Cairn Energy to retain a larger stake in Cairn India.

In August last year, Vedanta had offered to buy a 51%-60% stake in the Indian unit of Cairn Energy, in a deal expected to cost up to $9.6 billion.

The deal is awaiting approval from the Indian government.

Cairn Energy owns a 62.37% stake in Cairn India.

Vedanta has proposed to acquire up to 51% of Cairn India from its U.K. parent for INR405 a share. Vedanta unit Sesa Goa launched an open offer on April 11 for up to 20% of Cairn India from minority shareholders at INR355 a share. The open offer price doesn't include the INR50 non-compete fee that Vedanta had offered to Cairn Energy.

The open offer closes on April 30. Shares of Cairn India, which had earlier risen to as much as INR370, closed up 2.3% on Tuesday at INR344.25.

Vedanta, Cairn Energy and Cairn India didn't immediately respond to queries.

Earlier Tuesday, data on Factset showed that about 283.43 million shares of Cairn India were traded through block deals on the Bombay Stock Exchange. The three largest deals were for 265.19 million shares traded at a weighted average price of INR331.08 apiece, 12.08 million shares at INR331.08 each and 5.07 million shares at INR331.07 apiece.

The CNBC-TV18 television channel reported, citing sources it didn't name, that Vedanta bought an 11% stake in Cairn India from Petronas.

Cairn Energy has extended by more than a month the deadline for the stake sale to Vedanta to May 20 in order to accommodate the completion of the open offer and as an Indian ministerial panel scrutinizes the deal.

Cairn India holds stakes in 10 oil and gas blocks in India, including the huge RJ-ON-90/1 oil block at Barmer in western Rajasthan state. The block's output of 125,000 barrels a day accounts for about 17% of India's total crude production.