Going by the stock movement of Cairn India it is difficult to ignore the reports doing rounds in British media that BP is planning to takeover Cairn India's parent company Cairn Energy Plc.
Reports indicate that BP may make 2,800 pence per share bid for the UK based oil company. In the past, BP management has indicated that getting a foothold into India is its biggest challenge.
If one is to believe most analyst reports in UK, Cairn is by far the most obvious merger and acquisition candidate in the European E&P sector given that Cairn has a world scale undeveloped resource base in Rajasthan.
“The reason why I think it is very speculative at the moment is that Tony had difficulties last year in taking over from Lord Brown as chief executive officer, and what he is very keen to do is to re-establish the company by making the new management appointments. An acquisition at this juncture might be just a little bit perspective,” David Boik said.
But the stock in India is already sensing a development. For the last couple of days it has moved up by over 8 per cent. Cairn Energy in London was up 158 cents or 7.5 per cent on Tuesday.
British Petroleum in the past has indicated getting a foothold in Inida is its biggest challenge. If BP manages to acquire Cairn UK it may get 70 per cent of Cairn India in the process.
While all this remains in the realm of speculation, if the deal does come through, for BP it could be a significant move as it will get into a country where the E&P picture is just beginning to boom.
| Source: NDTV Profit |