Metals and mining group Vedanta Ltd on 11 April 2017 got effectively merged with its oil and gas subsidiary Cairn India Ltd.
Cairn India is a debt-free firm with cash and cash equivalents of Rs 22838.22 crore as of 30 September 2016.
Highlights of the merger
• The merged company will have a larger market cap of USD 15.6 billion.
• As per the deal, Cairn India minority shareholders will receive one equity share and four redeemable preference shares in Vedanta Ltd against each share they hold.
• Cairn India shareholders who will become shareholders of Vedanta will also receive an interim dividend of Rs 17.70 per equity share as approved by the board of Vedanta on 30 March 2017.
• No shares will be issued to Vedanta or any of its subsidiaries for their shareholding in Cairn India.
• Edinburgh-based Cairn Energy will have a 5 per cent holding in Vedanta. Cairn Energy will also get four preferential shares in the merged entity.
The two companies announced plans of the merger in June 2016.
With this, it is expected that Vedanta Ltd will have one of the strongest balance sheets in the Indian corporate sector with flexibility to balance capital allocation to the higher return projects while providing a strong and stable dividend.
Moreover, the merger will increase the appeal of Vedanta Ltd to global investors as it simplifies the structure and increases the size of the company.
The merger will also de-risk Cairn India by providing access to a portfolio of diversified tier-I long life assets to deliver significant near term growth, while retaining the oil and gas business of Vedanta.