Vedanta, Cairn India finish merger to form $15.6-bn market cap entity

Cairn Energy will have a 5% holding in Vedanta after the merger of Cairn India

Consolidating Vedanta’s position as one of the world’s largest diversified natural resources companies, Vedanta and Cairn India have completed their merger process on Tuesday.  

The merged entity will have a market capitalisation of $15.6 billion, and higher free float — outstanding shares available in the public sphere — of 49.9 per cent. "Vedanta will have one of the strongest balance sheets in the Indian corporate sector with flexibility to balance capital allocation to the highest return projects while providing a strong and stable dividend," a company statement said on Tuesday.  

According to the deal, shareholders of Cairn India will receive for each equity share held one equity share of face value Rs 1 each and four 7.5 per cent Redeemable Preference Shares in Vedanta with a face value of Rs 10 each. Cairn India shareholders, who will become shareholders of Vedanta, would also receive an interim dividend of Rs 17.7 per equity share as approved by the Vedanta board on March 30, 2017. Vedanta will arrange for a third-party facility enabling a cash exit for RPS holders at par within 30 days from issuance.

Navin Agarwal, chairman of Vedanta, said, “We are pleased to have completed the Vedanta-Cairn India merger and are very excited about the future of the combined company. I would like to thank the shareholders of both companies for their support for this transaction and welcome the Cairn India shareholders into Vedanta’s shareholder register. 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.”

Edinburgh-based Cairn Energy will have a 5 per cent holding in Vedanta after the merger of Cairn India. Cairn Energy, which has an ongoing tax dispute with the Government of India, will also get four preferential shares in the merged entity under a July 22 scheme announced by the Vedanta promoters.

Sudhir Mathur, acting chief executive officer, Cairn India said, "I am very excited about Vedanta’s commitment to grow our oil and gas business. 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 our oil & gas business.”