Cairn India to merge into Vedanta: 7 key points from the big deal

By: | Updated: June 15, 2015 12:34 PM

Billionaire Anil Agarwal on Sunday announced that he will merge two group companies, the oil and gas exploration major Cairn India into the natural resources arm Vedanta Ltd in a $2.3 billion all-share deal

Cairn india vedantaIndia?s largest private miner Vedanta Ltd headed by billionaire Anil Agarwal will absorb oil firm Cairn India in a .3 billion all-share deal. (Reuters)

Billionaire Anil Agarwal on Sunday announced that he will merge two group companies, the oil and gas exploration major Cairn India into the natural resources arm Vedanta Ltd in a $2.3 billion all-share deal. The move will create India’s largest diversified natural resources company.

Shareholders in Cairn India will get one ordinary share and 7.5 per cent redeemable preference share of Vedanta Ltd with a face value of Rs 10.

“The merger of Cairn India and Vedanta Ltd consolidates our position as India’s leading diversified natural resources champion, uniquely positioned to support India’s economic growth,” chairman Agarwal said.

Here are the seven key points that tell us why it is a big deal:

* Will help Agarwal own a diversified natural resources company, that resembles a BHP Billiton

* Minority shareholders of Cairn India will get one share of Vedanta for every share held

* Swap ratio of implies a premium of 7.3% to Cairn’s Friday closing price of R180.75 per share

* Cairn shareholders will also receive one 18-month redeemable preference share of R10 each, carrying a coupon of 7.5%, and listed on the NSE

* Critical will be votes of LIC, which holds 9.1% stake, and Cairn Energy Plc, which owns 9.8%

* Deal requires nod from a majority — greater than 50% — of minority shareholders, for both listed entities

* Also needs approval from more than 75% of all sharholders, including the promoter group

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