British shareholders of Cairn Energy in India expected to profit greatly
The British shareholder owning stakes in Scotland-based Cairn Energy firm will reap most of the profits that the company will generate from selling off its Indian branch. The buyout will occur in the nearest future, and will bring the company more than $8 billion. However, most of that sum will then go to its British investors. A similar transfer took place 4 years ago, when most of the finances gained from listing in India were paid off to the firm’s Brit shareholders.
The $8.48 billion garnered from the takeover comes from the relinquishing of the company’s holdings of more than 50% of Cairn India’s shares. The announcement was made by Cairn’s chief executive Bill Gammell who himself holds a considerable amount of the profitable shares, that have now risen tenfold, as the looming buyout is the works.
A previous $5 billion takeover was considered by the Indian Oil and Natural Gas Corporation, yet squabbles over the final prices and a number of other factors unravelled the deal, paving the way for the current much more substantial deal to be orchestrated.
The company being sold off was the only asset in Cairn Energy’s portfolio still producing a cash profit, with most of the rest of the firm’s assets located in Greenland.
A previous effort by Cairn India to raise almost $2 billion resulted in more than 80% of that money going to its British shareholders, and history seems to be repeating itself here.
The regions explored by the sold company currently generate 125,000 barrels of oil daily, yet with some developmental improvements, the production rates are expected to rise almost twofold.
The stock owned in the company by India, and Malaysia is expected to be sold in the coming days, with US-based firms owning the rest of the shares, which would in the end amount to roughly 20% of the company’s total stock.
The buyout’s profits are expected to be split between the company’s Scottish and British shareholders, whose total stake amounts to more than 80% of what the firm will receive in the massive takeover that marks the largest oil and gas deal in history.