The nod is first among several regulatory approvals, required for the Sesa-Sterlite merger
The merger, that will lead to a new entity, Sesa Sterlite, is aimed at simplifying the group structure of London-listed Vedanta Resources and will create seventh largest natural resources company in the world (in terms of EBITDA).
"... Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the combination under sub-section (1) of section 31 of the (Companies) Act," Competition Commission of India said in its order.
The nod is first among several regulatory approvals, required for the Sesa-Sterlite merger.
Vedanta had said earlier that it expects to complete the restructuring process by year-end after which a new entity Sesa Sterlite will be listed on the bourses.
As per the restructuring exercise, Sesa Sterlite will become holding company of Vedanta's all group firms except Konkola Copper Mines.
This includes Cairn India, Hindustan Zinc, Balco, Vedanta Aluminium, Madras Aluminium, Talwandi Sabo Power and Australian Copper Mines becoming subsidiaries of Sesa Sterlite.
Post merger, Vedanta Resources will hold 58.3% stake in Sesa Sterlite.
The decision to synergise activities in oil exploration, mining and non-ferrous metal will save the group Rs 1,000 crore per annum, Vedanta Chairman Anil Agarwal had said, while terming the restructuring of the group as a "natural evolution".
For the merger, Sterlite shareholders will get three shares of Sesa Goa for every five shares held, as per the swap ratio fixed. Eventually, they will become shareholders of Sesa Sterlite, that will be listed on the bourses, after receiving necessary regulatory approvals.
At the same time, Vedanta will also pass on most of its debt burden to Sesa Sterlite, that includes $5.9 billion debt taken for acquiring Cairn India last year.
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