In a long-expected move, the boards of Vedanta and Cairn India have decided to revise the merger deal by offering a better proposal. Financial institutions like Life Insurance Corporation of India had been opposed to the earlier merger proposal, stating that the ratio was against minority shareholders.
According to the revised deal, each Cairn India minority shareholder will receive one share in Vedanta and four redeemable preference shares with a face value of Rs 10 in Vedanta. The preference shares will have an interest rate of 7.5% per annum, and will have a tenure of 18 months from issuance. The deal represents an implied premium of 20% to one-month volume weighted average price of Cairn India share price, the companies said in a joint statement.
After completion of the transaction, Vedanta ownership in Vedanta is expected to decrease to 50.1% from the current shareholding of 62.9%. Cairn India minority shareholders will own 20.2% and Vedanta minority shareholders will own 29.7% stake in the enlarged entity.
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