Cairn India and Vedanta announce $2.3bn merger deal
Cairn India on Sunday accepted a $2.3bn bid from mining giant Vedanta, the companies announced in a joint statement.
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Under the deal, which is expected to complete in the first three months of next year, Cairn India investors will receive one Vedanta share for every Cairn share they hold, plus one redeemable preference share in Vedanta that has a face value of INR 10.
At a ratio of 1.04 for 1 shares, the value of the deal was slightly above expectations and implies a premium of 7.3% to Friday's closing price.
"The merger of Cairn India and Vedanta consolidates our position as India’s leading diversified natural resources champion, uniquely positioned to support India’s economic growth," Vedanta chairman Anil Agarwal said.
"This marks a significant step towards achieving our stated long term vision of a simplified group structure with alignment of interests between all shareholders for the creation of long term sustainable value."
The deal has been made to diversify the Tier-1 portfolio, de-risk earnings volatility and drive stable cash flow.
It will also give the enlarged combined company great financial flexibility and improve its ability to invest in high return projects.
Chief executive officer Tom Albanese added: "This transaction consolidates our portfolio of Tier-I assets which, combined with strong management, will deliver superior returns for all shareholders.
"It will result in improved financial flexibility to allocate capital to the highest return projects and sustain strong dividends. The combined entity is uniquely positioned to help unlock India’s wealth of world-class energy and mineral resources."