In an effort to woo the shareholders of Cairn India, Anil Agarwal’s Vedanta on Friday sweetened the merger deal between the two companies, which was announced first on June 14, 2015, by offering additional three shares.
The June 2015 announcement, which could not be completed because of fear that the shareholders of Cairn India, who hold around 20% stake in the company —will not vote for the merger, offered the shareholders of Cairn India one share and 7.5% redeemable preference shares of Vedanta with a face value of R10 each.
The revised offer, which was also approved by the board members of Vedanta and Cairn India, on Friday provide that each Cairn India minority shareholder will receive one equity share in Vedanta and four redeemable preference shares with a face value of Rs 10 each in Vedanta, with a coupon of 7.5% and tenure of 18 months from issuance.
Anil Aggarwal’s Vedanta
The new ratio, implies a premium of 20% on one-month Cairn India’s share price.
Earlier, the deal was to close by March 2016 but now the new deadline fixed is March 2017. The merger is subject to the shareholders approvals at each of Vedanta Plc, Vedanta Ltd and Cairn India, as well as customary regulatory approvals.
After the completion of the transaction, Vedanta’s Plc’s ownership in Vedanta Ltd is expected to fall to 50.1% from 62.9% now.
Cairn India’s minority shareholders will own 20.2% and Vedanta Ltd minority shareholders will own a 29.7% stake in the enlarged entity.
