Sharemasterindia.com: Cairn India shares surged as much as 13 per cent on Thursday after the Financial Times newspaper reported that the company's former parent - UK-based Cairn Energy - will vote against a proposal that involves merging Cairn India with its subsidiary Vedanta Limited.
In 2011, Cairn Energy had sold its controlling stake in Cairn India to Vedanta for $8.67 billion. Cairn Energy is now the biggest minority stake holder in Cairn India with 9.9 per cent stake.
Vedanta, which has nearly 60 per cent stake in Cairn India, wants to buyout the minority shareholders in a $2.3 billion deal; for the deal to go through, 75 per cent of shareholders should approve the deal.
Cairn Energy, along with LIC (state-run insurer), holds 19 per cent stake and if the two oppose the deal, the merger is unlikely to happen, analysts say.
In a note, CLSA said a possible rejection of the merger proposal between Vedanta and Cairn India will lead to a re-rating of Cairn India shares. The brokerage maintained its "buy" rating on Cairn India with a target price of Rs 250 per share, indicating a potential upside of 50 per cent from Wednesday's closing price.
As of 11 a.m. shares in Cairn India traded 6.56 per cent higher at Rs 177.9 apiece, outperforming the broader Nifty, which was up 0.06 per cent.
