Cairn's shareholders back sale to Vedanta

Published on Thursday 7 October 2010 15:25

Mining group Vedanta's proposed deal to buy a chunk of Cairn India came a step closer yesterday as shareholders of parent Cairn Energy overwhelmingly approved the deal, which could be worth up to $8.5 billion (£5.3bn).

The Indian government will decide on whether to approve the sale by the end of 2010, an official said.

A decision on the deal would need to be followed by formal approval, which could take longer.

Another Indian official said that he didn't think Indian state-run explorer Oil and Natural Gas Corporation had plans to pre-empt the stake sale, after ONGC said in September it was "not passive" to the deal and India's trade minister noted in August the company should have a say in the transaction.

Cairn Energy investors holding 99 per cent of the shares voted in favour of the sale of most of the Edinburgh group's stake in Cairn India.

In August, the oil and gas explorer struck a deal with London-listed Vedanta Resources to sell it between 40 and 51 per cent of Cairn India, the company it formed through spinning off its Rajasthan assets in 2007, for up to $8.5bn.

Cairn, led by Sir Bill Gammell, pictured, said it will return most of the sale proceeds to shareholders and spend the rest on exploration in Greenland, where two wells have so far found evidence of oil and gas but not in commercial quantities.

Shares in Cairn Energy closed down 4.2 per cent at 433.5p.