Must watch: Cairn -Vedanta merger by the year end

Vedanta, Cairn India and Vedanta Resources plc have declared their revised and final terms to the recommended merger between Vedanta and Cairn India. The deal status has come after trading hours on Friday.

The share prices of Vedanta and Cairn India increased by 7.44 per cent and 8.72 per cent  and closed at 168.95 and 192 respectively on an intraday basis.

There is a bunch of investment bankers acting as advisors for the deal. The list of investment bankers include Independent valuers, Price Waterhouse and Walker Chandiok, Lazard & Company, DSP Merrill Lynch Limited and JM Financial Institutional Securities, J.P. Morgan Cazenove and Morgan Stanley.

After the merger, each Cairn India minority shareholder will receive for each equity share held: 1 equity share in Vedanta and 4 Redeemable Preference Shares with a face value of Rs 10 in Vedanta, with a coupon of 7.5 per cent and tenure of 18 months from issuance. The shareholders will also get an implied premium of 20 per cent to one month volume weighted average price (VWAP) of Cairn India share price.

Post transaction, Vedanta plc's ownership in Vedanta is expected to decrease to 50.1 per cent from its current 62.9 per cent shareholding. Cairn India's minority shareholders will own 20.2 per cent and Vedanta's minority shareholders will own a 29.7 per cent stake in the enlarged entity.

The prolonged merger will benefit the group for creating long term sustainable value due to a simplified corporate structure. The Cairn India shareholders will benefit from exposure to a diversified portfolio of world-class, low cost, long-life assets with significant growth. The merger will lead to a re-rating of Vedanta.