NEW DELHI: State-owned ONGC, OIL and GAIL may make a joint bid to counter Vedanta Resources’ $8.48 billion offer for majority stake in Cairn India, and have already got $10 billion in loan commitments from international banks for the move.
Oil Ministry is believed to be uncomfortable with billionaire Mr Anil Agarwal-owned Vedanta Group buying 51-60 per cent of Cairn India for $8.48 to $9.6 billion and has asked Oil and Natural Gas Corporation (ONGC), Oil India (OIL) and GAIL to cobble up a joint bid to rival the London-listed miner.
The three firms have held informal talks on the joint bid even as the ministry is looking at legal options to deny Vedanta the approval necessary for conclusion of its deal with UK’s Cairn Energy Plc, which holds 62.37 per cent stake in Cairn India, sources familiar with the development said
on Monday. “Deutsche Bank, Credit Suisse and UBS, the only three leading bankers who are not in conflict with the Vedanta-Cairn Energy deal, may be advising ONGC on the counter-bid,” a source said. ONGC is the leader of the consortium with at least 50 per cent share. OIL and GAIL will each be 20-25 per cent partners.
ONGC has got informal commitments for funding up to $10 billion for the takeover bid, another source said, adding that the ONGC-OIL-GAIL consortium may make a bid at more than the Rs 405 a share offered by Vedanta.Industry observers, however, took a dim view of the state owned firms taking ownership of Cairn India as it would not add to energy security of the country because the oilfields are already in India and producing and perhaps may not be able to add any value beyond what has already been created.
Value would have been added only if the PSUs had used the money to acquire oil property abroad, they feel.
The message such a move would send to investors is that you can invest in India but cannot take money out, they said, adding that this would not augur well just when the next bidding for oil and gas blocks under the New Exploration Licensing Policy is round the corner.
Oil Ministry, a source said, was against Vedanta acquiring Cairn’s stake because it was a non-oil company.
