Dear Sir
I am an Investor of Cairn India and am aggrieved by the open offer price being offered to Minority shareholders like me,I believe that by classifying the premium being paid to Cairn Energy as Non compete fee the intention is primarily to reduce the open offer price and thus the overall acquisition price for Vedanta.
That Cairn Energy would continue to stay invested in Cairn India belies its claim of having received non-compete fee from Vedanta and proves that it was only making life that much easier for the acquirer by playing footsie with it.One wonders why. Is this a huge display of naiveté?
In any case, this flies in the face of non-compete fee and indeed in a way gives a lie to such a claim. It is indeed odd to find quarter being given to the one who has been paid a non-compete fee. Non-compete fee and continued interest in the business are incompatible phenomena.
Apart from the chicanery involved in camouflaging a good chunk of the negotiated price as toward non-compete fee, staying put in an acquirer's company albeit in a minor capacity gives the outgoing promoter enough power to constantly breathe down the neck of the acquirer when his purported intention is to break free of him.
It is my contention that in the present case non-compete fee in the context of takeover is a pure hogwash, I also at loss to explain myself on why a savvy businessman would expose himself to the potential danger of being constantly snapped at the heels by the one who has sold out. Even if the claim of non-compete agreement were to be believed, it is a tad ironical that the acquirer would not brook competition from the seller but would stoically put up with his intrusive presence inside the company.
It is my contention that the Non compete fee is a mere whitewash with the intention of depriving and reducing the acquisition for VEDANTA.As a shareholder of Cairn India I oppose any preferential treatment in payment of any fee to the promoters who by the way are not even exiting.
Kind Regards
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