Petronas Sells Cairn India Stake for $2.1B

NEW DELHI (Dow Jones Newswires), Apr. 19, 2011

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 Energy through its overseas arm Petronas International Corp. Two hundred million of those shares were sold to U.K.-listed, India-focused miner Vedanta Resources for $1.47 billion, or 331 Indian rupees a share, Vedanta confirmed.

"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 any of the buyers but a person with knowledge of the matter told Dow Jones Newswires aside from Vedanta, institutional investors were also behind the purchase of those shares.

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 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.

Vedanta proposed to acquire up to 51% of Cairn India from its U.K. parent Cairn Energy for INR405 a share, subject to the success of Sesa Goa's offer to buy up to 20% of Cairn India from minority shareholders at INR355 a share.

The offer is due to close on April 30 and India's government is currently reviewing Vedanta's purchase of a stake from Cairn Energy.

If the offer proves successful, then Vedanta could end up holding as much as a 70.4% stake in Cairn India, taking into account Tuesday's announcement of a stake purchase from Petronas.

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

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 Energy owns a 62.37% stake in Cairn India.

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.

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