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Vedanta Resources PLC, a FTSE 100 diversified natural resources group, has announced that it will acquire up to 60% of Cairn India Limited for an aggregate consideration of up to approximately US $9.6 billion (Rs. 44,160 crore) in cash. Latham & Watkins is advising Vedanta on matters relating to English law along with AZB & Partners who advising the mining giant. Cairn was advised by scottish firm Shepherd and Wedderburn on English law and S & R on Indian law aspects.
Vedanta Resources PLC, a FTSE 100 diversified natural resources group, has announced that it will acquire up to 60% of Cairn India Limited for an aggregate consideration of up to approximately US $9.6 billion (Rs. 44,160 crore) in cash. Latham & Watkins is advising Vedanta on matters relating to English law with a corporate team led by London partners Rory Negus and Graeme Ward, Hong Kong partner David Miles and Singapore partner Rajiv Gupta.
Vedanta was also represented as to matters of Indian law by AZB & Partners, with a deal team comprising Partners Shuva Mandal and Essaji Vahanvati.
Vedanta Group will acquire anywhere around 51% to 60% of Cairn India for an aggregate consideration of approximately US $ 8.5 – 9.6 billion as the mining giant is now looking at oil and natural gas as the next step for the company. Post this acquisition it is expected that Vedanta will hold 31-40% of Cairn India directly and Sesa Goa, a Vedanta company, will hold 20%.
Vedanta will acquire Cairn at a price of Rs. 355 ($7.8) per share and will also pay a non-compete fee of 50 ($$1.1) per share. According to the Investor presentations, Vedanta will raise $6.5 billion (Rs. 29,250 crore) through debt finance and $3 billion (Rs. 13,500 crore) through Sesa Goa’s cash reserves.
Cairn UK, the selling shareholder in Cairn India was advised by S & R with Partner Uday Walia taking the lead with the help of Associate Mohit Gogia. Scottish Firm, Shepherd and Wedderburn, which works closely with with Cairn UK advised the oil company on matters of English law. Corporate Finance Partner Paul Hally, who led the team at Shepherd and Wedderburn, in a press release said: “We were delighted to act as lead legal advisers to Cairn on such a significant transaction. That this deal was able to be closed within a matter of a few weeks is testament to the close working relationship we enjoy with the first class in house legal, tax and finance teams at Cairn. This is an important deal in a key sector for us. Across Shepherd and Wedderburn’s offices we have a great deal of experience in the energy sector.” The transaction he said will close towards the end of 2010.
Speaking to Bar & Bench Paul Hally said, “Shepherd and Wedderburn has had a 22 year relationship with Cairn in the UK”. On their relationship with Indian law firms Paul said “ We have worked with all most Indian firms including S & R and Amarchand in the past. This was the first time we were working with AZB and found them excellent”.
Bar & Bench spoke to Partners Rory Negus, who led the transaction from the London office and Rajiv Gupta, India Partner at Latham on the transaction:
This billion-dollar deal was signed in a few weeks. Talk us through the transaction
The transaction was in discussion for some time, and definitive contracts were signed last Monday. The transaction will take some more time to complete, as there is a mandatory open offer requirement under the SEBI rules.
Vedanta has used almost all law firms in India, while globally Latham has been Vedanta’s favourite
We are very fortunate to have had a very strong relationship with Vedanta. Last year we completed Vedanta’s subsidiary, Sterlite’s, ADR and SEC-registered convertible bond offering and have also previously worked on Sterlite’s $1.1 billion IPO. Latham has worked with major Indian law firms. In the past we worked with S & R in India on the Sterlite transactions. In this case however, S & R was conflicted as Cairn had already approached S & R. It was a pleasure for us to work with AZB on such an important transaction.
India has been economically insulated from the financial malaise that has affected many of the banks in Europe and the USA. The Indian financial system has been relatively resilient to the global downturn and has emerged with the ability to develop into a significant economic powerhouse over the next few years. We expect to see more M & A activity and global financial transactions where India is involved. India is a ‘very hot place’ currently although there are some restrictions imposed by the existing regulatory regime. Over time, hopefully these regulations will be further eased to attract more investment both into and outbound from India.