Centre ups ante on Cairn buyout

MUMBAI | NEW DELHI: Vedanta Resources' plan to buy control of oil and gas explorer Cairn India for $9.6 bn may be headed towards a legal and takeover battle, with the government insisting on its approval for the transaction and ostensibly prodding companies owned by it to launch a counter-bid.

Late on Monday evening, media reports said, citing sources, that Oil & Natural Gas Corp (ONGC) & gas transmission company Gail could team up to launch a counter-bid for Cairn India. Some agnecies reported that ONGC, Oil India and Gail may make a joint counter-bid for a majority stake in Cairn India, valued at $8.48 bn. ET was not able to confirm this story.

The deal, the biggest takeover in the country this year, may drag on if the government and Vedanta decide to battle it out in the courts over the state’s locus standi on the deal, leaving shareholders guessing about the outcome.

Blocking the deal by invoking a clause in an agreement between the company and government may also cause unease among global investors who have had bitter experiences in Russia and Venezuela, where the state forced ownership changes in the oil sector.