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Vedanta Completes Cairn India Deal

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Vedanta Resources Plc completed its long-delayed $8.7-billion purchase of a majority stake in Cairn Energy Plc's Indian unit, more than a year after the deal was first announced, in a move that turns India-focused Vedanta into a diversified resources group.

London-listed Vedanta now holds 58.5 per cent of Cairn India, it said on Thursday, of which 20 per cent is held through its Sesa Goa unit.

Cairn Energy, which will retain a 22 per cent stake in Cairn India, confirmed it would return around $3.5 billion to shareholders.

Cairn Energy agreed in August last year to sell a majority stake in Cairn India to Vedanta. But the sale, one of the largest in India's energy sector, was delayed for months due to a disagreement over royalty payments.

"Today marks a key milestone for Vedanta as it puts to bed a deal drawn out for well over a year that has contributed to underperformance on fears of deal terms uncertainty and balance sheet stress," analysts at Liberum said in a note.

"Oil has been a solid performer over the course of 2011 ... we see the Cairn India inclusion as the key factor in repairing Vedanta's balance sheet and boosting bottom-line performance."