Nearly 15 months after first announcing the deal, Vedanta Resources on Thursday announced the completion of its acquisition of a controlling stake in Cairn India.
Vedanta has acquired 58.5 per cent in Cairn India for a total consideration of $8.67 billion, the third-largest acquisition ever by an Indian enterprise globally.
The delay in completing the deal was largely due to differences between the UK-based Vedanta and the Indian government over royalties.
During the course of the negotiations with the government of India, the deal also ran the risk of being derailed.
Vedanta now holds 38.5 per cent of Cairn India, and its subsidiary, Sesa Goa, holds 20 per cent.
The transaction also marks Vedanta's entry into the oil and gas sector, with the potential to enhance and grow opportunities for the group in the sub-continent.
In a media statement issued on Thursday, Anil Agarwal, chairman of Vedanta, said, "The acquisition is a landmark event for the global natural resources sector and for India, which is looking at sustainable energy sources to fuel its growing economy. We firmly believe Cairn India has the potential to double its current capacity and
With Cairn India, Vedanta expands its already significant presence in Rajasthan, where it operates Hindustan Zinc the world's largest zinc-lead producer.
Cairn India operates the largest producing oilfield in the Indian private sector and some of its discoveries in Rajasthan are among the largest finds in the last two decades, said Vedanta.
It has an exploration record of having made 40 hydrocarbon discoveries in the last decade.
The 600-km long Mangala Development Pipeline is the world's longest continuously heated and insulated pipeline and has access to 75 per cent of India's refining capacity.
Cairn India has also discovered natural gas in Sri Lanka's offshore Mannar basin in 2011, the first hydrocarbon discovery in Sri Lanka.Cairn India is also working to develop and commercialise gas resources, both in its current blocks and as part of its future growth strategy.
India imports more than two-thirds of its oil needs and oil imports are forecast to grow at 5.4 per cent per annum over the period of 2005 to 2015.
Cairn India has the potential to produce 30 per cent of India's total crude oil production, and therefore has a crucial role to play in meeting India's energy requirements, the company.
