Cairn and Vedanta merger; what lies beneath for you

According to certain media reports emerged on September 6, Cairn India- Vedanta merger is likely to sail through after minority shareholders accepted the revised terms of merger of the two entities.

There was a list of prominent investment bankers working on this merger. List of investment bankers include independent valuers, PWC and Walker Chandiok, Lazard & Company, DSP Merrill Lynch and JM Financial Institutional Securities, J.P. Morgan Cazenove and Morgan Stanley.

As per the revised terms of offer, Cairn India’s minority shareholders will get one equity share and four redeemable preference shares of Vedanta for each share of Cairn India they hold as on record date. The initial offer, which was made during June 2015, was of one equity share and one preference share in Vedanta.

Post transaction, Vedanta Plc's ownership in Vedanta is expected to decrease to 50.1 per cent from its current 62.9 per cent shareholding. Cairn India's minority shareholders will own 20.2 per cent and Vedanta's minority shareholders will own 29.7 per cent stake in the enlarged entity.

The long- pending merger of Cairn India with parent Vedanta Resources is likely to create the country’s largest diversified natural resources firm which would compete with global biggies like Rio Tinto and BHP Billiton.

The prolonged merger will benefit the group for creating long term sustainable value due to a simplified corporate structure. Cairn India shareholders will benefit from exposure to a diversified portfolio of world-class, low cost, long-life assets with significant growth.

Scrips of both the companies are likely to remain in focus on September 7.