Vedanta, Cairn India Complete Merger To Form $15.6-Billion Market Cap Entity
The merger will give Vedanta access to Cairn India’s cash, helping it cut debt.
The merger of cash-rich oil producer Cairn India into its debt-ridden parent Vedanta Ltd is now complete, the two firms announced on Tuesday.
"This merger consolidates Vedanta's position as one of the world's largest diversified natural resources companies, with world-class, low-cost assets in metals and mining and oil and gas," a joint statement by the two firms said.
After absorbing its cash-rich subsidiary, Vedanta will have a larger pro forma market capitalisation of $15.6 billion and higher free float of 49.9 percent.
The two companies announced plans of the merger in June 2016, which would give the metals and mining company Vedanta access to Cairn India’s cash, helping it cut debt.
In July last year, Vedanta had sweetened its merger proposal to win over minority shareholders like LIC.
Shareholders of Cairn India will get one equity share of Vedanta and four redeemable preference shares of face value Rs 10 and coupon 7.5 percent, as against the proposal of one equity share and one preference share earlier.
April 27 has been set as record date for the share swap.
"Cairn India shareholders as on said record date, who will become shareholders of Vedanta, would also receive an interim dividend of Rs 17.70 per equity share as approved by the Board of Vedanta on March 30, 2017," the statement said.
Also, no shares will be issued to Vedanta or any of its subsidiaries for their shareholding in Cairn India.
Vedanta will arrange for a third-party facility enabling a cash exit for Redeemable Preference Share (RPS) holders at par within 30 days from issuance, the statement said.
We are pleased to have completed the Vedanta-Cairn India merger and are very excited about the future of the combined company. With world class assets in metals and mining and oil and gas, Vedanta will fuel India’s economic growth and generate value for all stakeholders.Navin Agarwal, Chairman, Vedanta
Sudhir Mathur, Acting CEO of Cairn India, said the merger with Vedanta will de-risk Cairn India by providing access to a portfolio of diversified tier-I, low cost, long-life assets to deliver significant near term growth, while retaining the substantial upside from oil and gas business.
Our continued focus to remain a low-cost operator with low leverage will provide us the financial flexibility throughout the cycle and help us create long term value for all stakeholders.Tom Albanese, Outgoing CEO, Vedanta
The merger, the Vedanta CEO added, will increase the appeal of Vedanta to global investors as it simplifies the structure and increases the size and free float of the company.