Mumbai, Aug. 13: Vedanta Resources, the holding company belonging to billionaire Anil Agarwal, is looking to buy a majority stake in Cairn India Ltd in a $8-8.5 billion deal.

It is not clear whether Vedanta will buy a 51 per cent stake from Cairn Energy Plc or opt to acquire a 31 per cent stake now and later come out with an open offer to raise its holding to 51 per cent.

Reports indicate that Agarwal is scheduled to meet Cairn Energy Plc chief executive Bill Gammell in London today. The deal could be announced in the next two to three days.

On Thursday, both Vedanta and Cairn Energy had confirmed that they were in talks for the sale of the Edinburgh-based oil and gas explorer’s stake in Cairn India. Cairn Energy holds 62.37 per cent in the Indian subsidiary.

The Cairn India stock surged 4.36 per cent to close at Rs 355.45 on the BSE today. At one stage, it had touched a high of Rs 358.

However, shares of Vedanta Resources today plunged 5.87 per cent to £20.53 on the London Stock Exchange.

It is learnt that Cairn Energy wants to sell its controlling stake at a premium. The buzz is that the shares will be sold at a price closer to Rs 400 per share.

Alok Deshpande, analyst at Elara Capital, said the ballpark estimate of the deal at $8-8.5 billion was a positive for Cairn India. Even at the lower-end of the deal ($8 billion), Cairn India will be valued at $15.7 billion against its current market cap of $14.4 billion.

“The lower-end valuation will imply per share valuation of Rs 390, an upside of around 10 per cent from current levels. At the higher end, it will imply a valuation of Rs 413 per share — an upside of 16 per cent from current levels,” he said.

According to Deshpande, a valuation of $15.7 billion for Cairn India will mean that apart from the valuation of the core producing Rajasthan fields, the company is also getting much higher valuations for its other reserves in the Rajasthan block.

The deal will, however, be contingent on government approval as Cairn India’s three producing oil and gas assets, including the Rajasthan fields and seven exploration blocks, either have explicit provision for seeking prior approval before transfer of interest or gives pre-emption or right of first refusal to partners such as Oil and Natural Gas Corporation.

Cairn Energy Plc, which has kept the management of its subsidiary out of the talks, today deputed Cairn India CEO Rahul Dhir to brief the government whose approval was crucial for the deal to go through.

After meeting Dhir, petroleum secretary S. Sundareshan said the deal would need the government’s approval. All production sharing contracts signed by companies for exploring oil and gas have provisions for prior government approval before a stake in either a field or a company is sold.

Dhir said he was not part of the discussions that were being conducted by Cairn India’s parent company.

“To me it looks like they (Cairn Energy Plc) are not exiting completely... I am not aware of (the details). The discussions are taking place between majority shareholder and Vedanta. I am not part of those discussions,” said Dhir, who like Bill Gammell, holds one share in Cairn India.