Board may take up Vedanta-Cairn merger tomorrow, experts divided

PROMOTERS HOLD 60% IN CAIRN INDIA, WHILE 19% IS HELD BY LIC AND CAIRN ENERGY, AND 13% BY FIIs

NEW DELHI: As speculation mounts on whether Anil Agarwal-led mining conglomerate Vedanta Resources would alter the terms of the proposed merger of Cairn India Ltd with itself, experts remain divided on the outcome.

JN Gupta, founder of Mumbai-based Stakeholder Empowerment Services, said minority shareholders, including UK-based Cairn Energy (Cairn India’s former parent company) and Life Insurance Corp of India, are unlikely to accept the deal, as it did not appear lucrative for them. Vedanta has offered one share for every share of Cairn India.

“There is a significant price difference. When the merger was announced, Cairn India was trading at `170-180 levels and Vedanta was at around `200 a share. Now, Cairn India is around `160, while Vedanta has come down to around `100,” Gupta said.

Vedanta’s board is scheduled to meet on Tuesday, and the issue of merger could also be discussed. An email to a Vedanta spokesperson remained unanswered.

Shriram Subramanian, MD of InGovern Research Services Pvt Ltd, however, said the merger itself is “not logical” as there is “absolutely no synergy between these two companies.”

Gupta said the `17,943-crore cash balance of Cairn India is also likely to come into play. Moreover, Cairn India has loaned $1.25 billion to Vedanta. Vedanta, which is laden with gross debt in excess of `77,000 crore, has, however, said in the past that the merger is not to refinance the same.

A questionnaire sent to a Cairn India spokesperson also remained unanswered.