Market regulator SEBI has not yet approved the open offer made by Vedanta Group to Cairn India shareholders, even as the target company formed a two-member panel to look into the offer made to minority shareholders.
Billionaire Anil Agarwal-led Vedanta Group is buying Cairn Energy Plc’s 40-51 per cent stake in Cairn India and has made an open offer for an additional 20 per cent stake - which will take the deal size to up to USD 9.6 billion.
“SEBI will look at the financials of the transaction and will decide on the open offer price,” Cairn Energy Plc CEO and Cairn India Chairman Bill Gammell told reporters after the AGM of Cairn India.
Gammell said, “We will seek all necessary approvals from the government” and said that Cairn India’s skill-sets are its people and the company will retain the management structure even after the change of ownership.
“This is a corporate transaction involving change of shares at the corporate level. Cairn India is about its people and the knowledge resides in these people and not in Cairn Energy Plc,” he said when asked if Vedanta’s lack of experience in oil business may become a stumbling block to obtain regulator approvals.
Vedanta is paying Rs. 405 per share to Cairn Energy, including a non-compete fee of Rs. 50 per share, while it has made an open offer to Cairn India shareholders at Rs. 355 (offer price minus non-compete fee). The open offer will start on October 11.
Cairn India CEO Rahul Dhir said, the transfer of shares does not affect the operations of Cairn India and the company would continue to do business as usual.
Gammell refused to comment on Vedanta’s offer price, saying it is for Vedanta to decide.
“The matter is with SEBI. They have not yet decided,” he said.
Meanwhile, Cairn India has formed a committee of two independent directors - Omkar Goswami and Ed Story - to look into issues of minority shareholders.
Goswami said, “We are looking at various matters of transactions. One of the matters is difference between offer made to minority shareholders and that extended to the Cairn Energy Plc.”
“We did ask the Chairman of Cairn India whether the difference can be eliminated...under section 20(8) of SEBI Takeover Code up to 25 per cent premium can be given as non- compete fee. This Rs. 50 is only 14 per cent of the offer size so that is no clear legal deviation.” Goswami added.
