DealZone

India-focused miner Vedanta Resources is reportedly close to buying a 51-percent stake in oil producer Cairn India for $8 billion to $8.5 billion, a source familiar with the matter told Reuters. While neither Cairn Energy nor Vedanta would comment, the source said the deal is expected to be announced on Monday.

Cairn India was boosted by a huge oil find in Rajasthan that turned the company into a major oil producer and, according to Reuters, the deal “would be the diversified miner’s (Vedanta) first move into oil and gas.” Read the Reuters factbox on Cairn India here.

****************

Google has been on a spending spree lately and folks are wondering who it will buy next? After paying $182 million for Facebook-app maker Slide earlier this month and reportedly making a buyout offer to Jambool, CEO Eric Schmidt recently told Bloomberg he has doubled the pace of acquisitions after some of Google’s internal projects failed.

PE Hub replayed a nice interview with David Lawee, Google’s VP of corporate development, on what the search giant looks for in acquiring companies.

****************

IBM announced it will buy software company Unica Corp for about $480 million in cash, reported Reuters. IBM will pay around $21 per Unica share, which sent Unica’s share price soaring 117 to as high as $20.78 in morning trading on the Nasdaq.

BP is still looking at asset sales, but those efforts are being eclipsed now by more exciting prospects of direct investment in the company. Buy ratings are popping up again.

How seriously did people doubt a big oil company’s ability to survive a crisis, even a badly mismanaged one? After all, this oil we’re talking about. Not some revolutionary technology that can be reproduced by anyone with a computer. There’s a heap of value in them thar wells for energy hungry humanity – a whole lot more than there is sympathy for oil-choked wildlife. Note: the tar balls may have kept Independence Day beach-goers away, but don’t think for a moment they didn’t turn on the air conditioning in their RVs when the mercury hit triple digits this weekend.

In asking sovereign wealth funds for money, BP is following in the footsteps of banks. The SWFs’ investments in banks ended up losing big money for the investors, but the funds might feel differently about BP. Energy, after all, is a business that sovereign funds in the Persian Gulf, Singapore, and oil-hungry China know well.

Cerberus Capital Management said it would buy defense contractor DynCorp International for about $1 billion in cash in one of the biggest leveraged buyouts of a publicly traded US company since the global financial crisis.  Read the Reuters story here.

A subsidiary of China’s Sinopec Group agreed to pay $4.65 billion for ConocoPhillips’s stake in a Canadian oil sands project, marking the country’s second largest investment in North America.  Read the Reuters story here.

And in stories reported by other media on Tuesday:

Buyout lender Intermediate Capital Group has raised 843 million euros for a new fund that will invest in debt-burdened private equity deals, the FT said. The fund will buy debt at a discount and provide fresh capital for European companies worth as much as 500 million euros.

From the Thomson Reuters data team:

Exxon Mobil’s $40.7 billion acquisition of XTO Energy ranks as the sixth biggest announced worldwide M&A transaction this year and the fourth biggest US target transaction. The deal ranks as the eighth biggest Energy & Power M&A transaction in history and marks the biggest US transaction since Chevron’s $43.3 billion acquisition of Texaco in October 2000.  The $85.1 billion combination of Exxon and Mobil in December 1998 ranks as the biggest Energy & Power deal on record. Worldwide, energy & power M&A totals $330.9 billion for year-to-date 2009, an 18.1% decrease from last year at this time.  Worldwide M&A in the oil & gas sector totals $203.7 billion, a 17.2% increase over last year at this time. In the US, energy & power M&A accounts for 12.2% of overall activity, a 7.5 decline from last year.  Oil & gas M&A activity in the US totals $74.9 billion, a 35.6% increase over 2008. With the announcement, JP Morgan (advisor to Exxon Mobil), moves from fourth place to third place for worldwide merger advisors, with $467.5 billion in announced deals from 299 deals. Barclays and Jefferies (advisors to XTO Energy) rank 10th and 21st, respectively. In the US, JP Morgan remains in third place with $269.5 billion.  Barclays moves to sixth place from seventh and Jefferies moves from 23rd place to 13th.

Deloitte’s Energy and Resources group says M&A in these sectors could return to “pre-recession levels” by 2011. In particular, it says the rise of big state-backed rivals is putting pressure on large mining groups, in much the same way Big Oil came under pressure a decade ago. From the group’s 2010 predictions report:

“During 2009, mining M&A has been led by the junior or mid-level players, which have to consolidate if they want to stay alive and not be swallowed up by the bigger firms. Indeed, many anticipate that the mining sector will continue to consolidate until there are a handful of supermajor firms like there are in oil & gas.

“Large mining companies will increasingly need to buy rivals and subsequently sell off assets to gain synergies if they are to compete with state-owned companies, particularly those from China.

General Motors’ upcoming Volt model will run up to 230 miles per gallon of fuel, but the saga to sell off its European operations seems equally long-lasting. The bidding process is now between two bidders — Magna International and RHJ International — with GM’s CFO Ray Young telling Reuters earlier that “everyone is anxious to get this thing done”.

In other M&A related stories reported by media on Wednesday:

Indian state-run explorer Oli and National Gas Corp is in talks with three Russian firms about a joint bid for a stake in YPF the Argentinean arm of Spanish oil major Repsol YPF SA, the Economic Times reported.

JP Morgan is looking to sell 23 office properties in what may be the country’s largest office real estate sale this year, the Wall Street Journal said. Here’s Reuters’ report.

Citigroup plans to sell 20 businesses in consumer finance, many of them located in Europe, its chief executive Vikram Pandit said in an interview with Singapore’s Business Times. 

He said the move was due to the shift in the consumer finance market where “there is less funding availability and they are probably less robust as businesses.”

Pandit also said that the group’s capital position following the completion of the exchange of preferred shares for common equity in July, reflected an “incredible financial strength.”

Energy M&A has heated up over the past few weeks, with two large deals possibly on the horizon: the sale of Repsol’s Argentine unit YPF as well as Kosmos Energy’s stake in the Jubilee oil field in Ghana.

If thise deals would happen, it would follow Suncor Energy’s $20 billion takeover of rival Petro Canada, announced earlier this year.

So is M&A in the oil sector heating up? Maybe, but insiders warn that the fluctuations in oil and gas prices could slow the flow of deals.

Having the engine of cheap exports able to secure oil and other resources can’t be bad for firing up global economic recovery. So Sinopec‘s purchase of Swiss oil explorer Addax Petroleum — China’s biggest overseas acquisition — should be an encouraging event.

Addax brings high-potential oil blocks in West Africa and Iraq. These are areas that tend to present difficulties for Western oil companies, so the deal exposes gaps that big emerging powers such as China, India and South Korea are looking to exploit. Certainly, these corners of the world are less politically perilous for the People’s Republic than the United States, where local politicians blocked CNOOC’s $18.5 billion bid for oil company Unocal in 2005.

Is it too convoluted to suggest that the bad blood still dripping from the failed Unocal bid might wind up being the grease that gets a world of other deals done for China?