The Securities and Exchange Board of India (SEBI) has approved an open offer to buy shares in Cairn India in an issue to be launched next week, Vedanta Chairman Anil Agarwal told reporters on Tuesday.
The SEBI approval of the open offer comes seven months after London-listed Cairn Energy agreed to sell up to 51 percent in its Indian unit to Vedanta in a deal valued at up to $9.6 billion.
The deal has been delayed due to a dispute over royalty payments by state-run Oil and Natural Gas Corp, which has a 30-percent holding in the Cairn-operated Rajasthan fields but pays 100 percent of the royalties.
Agarwal said he believed the royalty payments issue should be treated separately.
"The uncertainty about the royalty issue will play on investors' minds during the open offer if the deal is cleared without settling the royalty part," said Alok Deshpande, an energy sector analyst with Mumbai brokerage Elara Capital.
The deal still needs Indian government's approval, which is crucial for completion of the biggest acquisition in the Indian oil sector and could boost investor sentiment in Asia's third-largest economy.
"It will come within a few days. We are waiting for that," Agarwal said, when asked about the government approval. "The government has assured us the decision will come very soon."
India's oil ministry has maintained it has nothing against the deal but it would strive to protect ONGC's interests.
Any changes in the royalty structure or cess payments would impact valuations and could jeopardise the deal, analysts have said.
"In terms of corporate structuring of the deal, we think there is nothing wrong in this deal and therefore the open offer approval was expected," Deshpande said.
"The royalty payment has created such a big issue and it remains to be seen the clauses that will be put to resolve this," he said.
India's oil secretary on Monday said he hoped the cabinet would soon make a decision on the deal.
Last month, Cairn Energy's Chief Executive Bill Gammell said he expected the company to receive approvals for the deal by April 15, a deadline set by both companies to seal the transaction.
Shares in Vedanta Resources were up 2.7 percent at 2,477 pence, while Cairn Energy rose 1.2 percent to 468 pence.
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