Cairn India to merge with Vedanta in Rs14,720 cr deal

After the merger, the ownership of Vedanta PLC in Vedanta Ltd, India’s largest private sector miner, is expected to decrease to 50.1 per cent from its current 62.9 per cent shareholding.

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Cairn India minority shareholders will own 20.2 per cent and Vedanta Ltd minority shareholders will own a 29.7 per cent stake in the enlarged entity.

Anil Agarwal, chairman of Vedanta plc, said: “The independent directors in Vedanta Ltd and Cairn India unanimously recommended the proposed combination. This marks a significant step towards achieving our stated long-term vision of a simplified group structure with alignment of interests between all shareholders for the creation of long term sustainable value.”

In a statement, the Cairn India said, “strategy remains unchanged, with continued focus on delivering attractive growth, sustainable development and long-term value for all shareholders and commitment to growth and to sustain strong dividend distribution.” The merger is expected to be completed in the first quarter of calendar year 2016.

Tom Albanese, CEO of Vedanta Ltd, “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.”

The combined entity is uniquely positioned to help unlock India’s wealth of world-class energy and mineral resources, he said.

“The merger with Vedanta will generate additional value for our shareholders and derisks Cairn India by providing access to a portfolio of diversified tier-I, low cost, long-life assets, to deliver significant near term growth.

Our Rajasthan fields continue to remain our core asset. The financial strength of the enlarged group will ensure greater access
to capital to further Indian oil and gas development,” said Mayank Ashar, CEO of Cairn India.

Independent valuers Price Waterhouse & Co LLP and Walker Chandiok & Co LLP provided their joint recommendation on the exchange ratio for consideration by the boards of Vedanta and Cairn India.

The deal will help Vedanta with a debt of over Rs 77,000 crore to reduce its leverage as it will have access to Cairn India’s Rs 21,000 crore cash reserves.