Mumbai: Metals and mining group Vedanta Ltd, controlled by London-based non-resident Indian businessman Anil Agarwal, said the merger with its oil and gas subsidiary Cairn India Ltd has become effective as of Tuesday.
In a statement to BSE, Vedanta said, “The merged company will have a larger market cap of $15.6 billion. Vedanta will have one of the strongest balance sheets in the Indian corporate sector with flexibility to balance capital allocation to the higher return projects while providing a strong and stable dividend.”
Cairn India is a debt-free firm with cash and cash equivalents of Rs22,838.22 crore as of 30 September 2016.
Last July, Vedanta sweetened the deal for shareholders of Cairn India Ltd to push through the merger that had been in the works since 14 June 2015 and was stuck due to opposition from minority investors, including Life Insurance Corporation of India. LIC voted in favour of the merger last September.
As per the revised terms of the scheme, for each share they hold, Cairn India minority shareholders will receive one equity share and four redeemable preference shares in Vedanta, a steep improvement over the previous offer of one equity share and one redeemable preference share for each Cairn India share.
On Tuesday, Cairn India’s scrip closed at Rs303.90, up 0.86% while Vedanta Ltd fell 0.77% to Rs252.75 on BSE. The Sensex closed at 29,788.35 points, up 0.72%.
Sudhir Mathur, acting chief executive of Cairn India, said, “The merger with Vedanta Ltd 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 and gas business.”
The record date for determining the list of the shareholders of Cairn India to whom the equity and preference shares of Vedanta will be allotted as per terms of the scheme has been fixed for 27 April.
Cairn India shareholders who will become shareholders of Vedanta will also receive an interim dividend of Rs17.70 per equity share as approved by the board of Vedanta on 30 March.
No shares will be issued to Vedanta or any of its subsidiaries for their shareholding in Cairn India, said Vedanta.