Cairn India drops after talks of merger with Vedanta

Cairn India lost 4.21% to Rs 173.05 at 11:35 IST on BSE after reports the metal and mining giant Vedanta is in the final stage to announce a merger of its subsidiary Cairn India with Vedanta.

Shares of Vedanta rose 2.15% to Rs 180.85.

Meanwhile, the BSE Sensex was up 3.20 points, or 0.01%, to 26,526.29.

On BSE, so far 2.08 lakh shares were traded in the counter, compared with an average volume of 2.87 lakh shares in the past one quarter.

The stock hit a high of Rs 176 so far during the day. The stock hit a low of Rs 170.80, also a 52-week low for the stock. The stock hit a 52-week high of Rs 385 on 11 June 2014.

The stock had underperformed the market over the past one month till 8 June 2015, declining 12.35% compared with 2.15% decline in the Sensex. The scrip had also underperformed the market in past one quarter, dropping 24.51% as against Sensex's 9.94% fall.

The large-cap oil & gas exploration and production company has an equity capital of Rs 1874.85 crore. Face value per share is Rs 10.

The merger of Vedanta with Cairn India will give the parent access to Cairn's cash and help reduce debt, as per reports. The two are shortly expected to inform shareholders about the proposed transaction, report said.

Based on weighted average stock prices of the two companies for the past six months, Cairn India shareholders should receive about 1.1 share of Vedanta for each share of Cairn - in other words 11 shares of Vedanta for every 10 Cairn shares, report added.

Meanwhile, British oil explorer Cairn Energy, which has 9.8% stake in Cairn India, is fighting a bitter tax dispute with the Indian government. The government has asked Cairn Energy to pay $1.6 billion on an alleged Rs 24500 crore capital gains it booked in 2006 by transferring its assets in India to a new company, Cairn India, and getting it listed.

Cairn India reported consolidated net loss of Rs 240.82 crore in Q4 March 2015 compared with consolidated net profit of Rs 3035.44 crore in Q4 March 2014. Total income dropped 45% to Rs 2866.48 crore in Q4 Mach 2015 over Q4 March 2014.

Vedanta holds 59.87% stake in Cairn India as per the shareholding pattern as at 31 March 2015.

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