JOIN USIn a deal that will create a natural resources champion in India, Vedanta PLC and its group subsidiaries have decided to merge Cairn India into Vedanta Limited in an all-stock deal worth over $2 billion.
As per the terms of the deal, Cairn India minority shareholders will receive one equity share for every share held in Cairn India. The shareholders will also receive one 7.5 per cent redeemable preference share in Vedanta with a face value of Rs 10.
The deal implies a premium of 7.3 per cent to the closing price of Cairn India. Following completion of the transaction, Vedanta PLC’s ownership in Vedanta Limited is expected to decrease to 50.1 per cent from 62.9 per cent. Cairn India minority shareholders will own 20.2 per cent and Vedanta Limited minority shareholders will own a 29.7 per cent stake in the enlarged entity.
The deal will be tax neutral transaction for Vedanta Limited, Cairn India Limited and their shareholders under Indian law and no shares will be issued to Vedanta Limited or its subsidiaries for their shareholding in Cairn India. Vedanta Limited would further consider consolidation of some of its wholly owned foreign subsidiaries and it will continue to be listed on the BSE and National Stock Exchange.
“This transaction consolidates our portfolio of tier-I assets which, combined with strong management, will deliver superior returns for all shareholders. It will result in improved financial flexibility to allocate capital to the highest return projects and sustain strong dividends,” Vedanta Limited Chief Executive Officer Tom Albanese said.
Cairn’s strategy for growing the oil and gas business remains the same post the merger. We remain committed to continue with the Cairn brand in the long term, Albanese added. As far as the deal completion is concerned, Albanese said that he hopes to complete the transaction by the first quarter of 2016.
“The deal is subject to approval of the Indian stock exchanges, Sebi, High Court, Vedanta Limited and Cairn India Limited shareholders. It is also subject to nod of the Ministry of Petroleum and Natural Gas and the Foreign Investment Promotion board,” Albanese said.
Muscle in Merger
Cairn India-Vedanta to merge in all-stock deal worth over $2 b
Following completion of the transaction, Vedanta PLC’s ownership in Vedanta Limited is expected to decrease to 50.1 per cent from 62.9 per cent
Cairn India minority shareholders will own 20.2 per cent of the enlarged entity
Vedanta Limited minority shareholders will own a 29.7 per cent stake