Vedanta buys Cairn India stake for $9.6 bn

London-listed Vedanta Resources said Monday it had agreed to acquire a majority stake in energy explorer Cairn India for up to $9.6 billion in cash, building on its core mining business.

"The proposed acquisition significantly enhances Vedanta's position as a natural resources champion in India," Vedanta's Indian tycoon owner Anil Agarwal said in a statement.

The news sent the share prices of Vedanta and Cairn Energy -- the majority-owner of Cairn India -- to the top of London's benchmark FTSE 100 index.

Cairn India is the country's fourth-largest oil and gas company, thanks to a massive energy find in the western Indian desert state of Rajasthan.

"Cairn India's Rajasthan asset is world class in terms of scale and cost, delivering strong and growing cash flow," said Agarwal.

"The company has a proven management team and very significant further resource potential. Cairn India will benefit from Vedanta's track record of acquiring and growing world class companies, especially in India."

Vedanta -- which has iron ore, zinc and copper mines -- follows the world's biggest miner BHP Billiton in acquiring oil assets.

Vedanta said it would buy 51-60 percent of Cairn India for between $8.5 bn and $9.6 bn  (6.7 and 7.5 billion euros). The deal is expected to complete in three months.

Scottish exploration group Cairn Energy, which holds 62.4 per cent of Cairn India, said the sale would allow it to return cash to shareholders and provide it with funds to push on with its drilling programme in Greenland.

The sale value is a 32-per cent premium to the average closing share price of Cairn India over a 90 day period.