Vedanta a Direct Challenge to Mukesh Ambani & Reliance Empire

August 18, 2010 · Author: · Category: / 

Vedanta Group [One of the Largest Global Natural Resources Mining Companies] to acquire 51% to 60% of Cairn India Limited (“Cairn India”) for an aggregate consideration of approximately US$8.5-9.6 billion in cash. This is A unique investment to create the Indian natural resources champion to meet the needs of a growing economy. Acquisition of a world-class asset and management team.

Vedanta’s decision to execute the deal using cash reflects the company’s confidence in its ability to generate enough cash flows and increase earnings generation from its business portfolio over the next 2-3 years.

Extremely Strong Management – There are no material operational synergies between Cairn and Vedanta’s current operations, in our view, which makes the deal a call on Vedanta management’s ability to get more out of Cairn’s portfolio. The track record of successful value creation at Bharat Aluminum, ALCO, KCM, Hindustan Zinc and Sesa Goa (all assets acquired in the past 7-8 years) has been very good.

With this deal, Vedanta Group Founder Chairman has moved into the Top 3 Richest Businessmen of India openly challenging the Reliance Industries Inheritor – Mukesh D. Ambani in his core operations of Oil & Gas. It is rumored that Reliance will use its Money and Political clout to block the Vedanta-Cairn deal, but Aggarwal is not a weak soul and will give sleepless nights to Mukesh Ambani and is in all likelihood to displace him from India’s second richest business group very soon. What say ?

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