Anil Agarwal-promoted Vedanta Ltd on Sunday said it would merge its subsidiary Cairn India with itself. The deal needs the approval of majority of minority shareholders. Cairn India's annual general meeting will be held on July 21, where the shareholders will get a chance to vote on it. Vedanta almost holds 60 per cent stake in Cairn India.
As part of the merger deal, each Cairn India shareholder will be offered an equity share of Vedanta, besides a 7.5 per cent redeemable preference share having a face value of Rs. 10.
Though the merger deal is seen positive for Vedanta, some analysts have expressed concern over the valuation of Cairn India. The Press Trust of India report quoting a source said LIC at a meeting with Cairn India officials expressed concerns around valuation and debt situation of the entity post-merger.
Cairn India has Rs. 16,867 crore of cash on its books, while Vedanta has debt of Rs. 37,636 crore. Meanwhile Anil Agarwal has ruled out Vedanta Ltd raising the offer to absorb the cash rich oil firm.
At 10:43 a.m., shares of Vedanta Ltd were down 2.8 per cent at Rs. 173.50 as compared to 0.30 per cent gain in Sensex. Meanwhile, Cairn India shares were down 1.10 per cent.
