Vedanta, Cairn India gain after reports of former's CEO being hopeful of clinching merger deal

Vedanta and Cairn India rose 4.17% and 4.55% respectively at 15:00 IST on BSE after reports suggested that Vedanta's CEO is hopeful that the company can clinch Cairn India's merger deal with Vedanta.

Meanwhile, the S&P BSE Sensex was down 65.73 points or 0.23% at 28,057.71.

Vedanta (up 4.17% to Rs 179.90) and Cairn India (up 4.55% to Rs 211.50) gained.

Vedanta's Chief Executive Officer, Tom Albanese was reportedly quoted by media as saying that the company received a constructive feedback from minority shareholders in Cairn India to a sweetened buyout offer. He reportedly added that the company is hopeful it can clinch the long-delayed merger deal of Cairn India with Vedanta.

He said that the company reached out to all the shareholders and held constructive discussions across the board. The company looks forward to the vote in the coming weeks, he reportedly added. The Jurisdictional High Courts have convened the shareholder meetings for Vedanta and Cairn India on 8 September 2016 and 12 September 2016 respectively for shareholders' approval for the merger.

Vedanta, Cairn India and the parent company, Vedanta Resources plc had announced revised and final terms to the recommended merger between Vedanta and Cairn India on 22 July 2016. The boards of Vedanta and Cairn India had approved revised and final terms for the transaction, taking into account prevailing market conditions and having regard to underlying commercial factors. Pursuant to the revised and final terms, each Cairn India minority shareholder would receive for each equity share held in Cairn one equity share in Vedanta and four redeemable preference shares with a face value of Rs 10 in Vedanta with a coupon of 7.5% and tenure of 18 months from issuance and implied premium of 20% to one month volume weighted average price (VWAP) of Cairn India share price.

As per the original terms of the deal announced in June 2015, Cairn India shareholders were to get one equity share of Vedanta for each share held in the company and one 7.5% redeemable preference shares (RPS) of Vedanta of the face value of Rs 10 each with tenure of 18 months for each share held in Cairn India. The recent commodity price environment has further strengthened the strategic rationale for the merger, the two Vedanta group companies had said in a joint statement at that time. The merger between Vedanta and Cairn India was first announced on 14 June 2015.

Vedanta's consolidated net profit fell 27% to Rs 615.02 crore on 15.2% decline in net sales to Rs 14364.01 crore in Q1 June 2016 over Q1 June 2015.

Cairn India's consolidated net profit slipped 28.3% to Rs 359.55 crore on 28.2% fall in net sales to Rs 1885.11 crore in Q1 June 2016 over Q1 June 2015.

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