Market responds cautiously to Cairn India, Vedanta shares post merger announcement

Shares of Anil Agarwal-controlled Cairn India and Vedanta Ltd displayed a mixed response on the bourses post the merger announcement on Sunday. At 11.45 am, shares of Cairn India were up at Rs 185.40, up 2.6 percent from previous close. Nearly 6 lakh shares changed hands on BSE so far. However, Vedanta Ltd shares were down 0.4 percent at Rs 183.30 on volumes of five lakh shares being traded. [caption id=“attachment_2295984” align=“alignleft” width=“380”]  Anil Agarwal[/caption] As per the merger deal, Cairn India’s minority shareholders will get one equity share in Vedanta for each share held, besides one 7.5 percent redeemable preference share with a face value of Rs 10 face value. Further, Vedanta Ltd will get access to Cairn India’s Rs 21,000 crore cash, allowing the former to reduce its debt burden standing at Rs 77,000 crore. Experts reckon the merger deal to be more favorable towards Vedanta Ltd than Cairn India. As it is, the sharp fall in global crude prices has resulted in Cairn India’s market-cap falling to around Rs 33,500 crore from Rs 77,000 crore in the last one year. According to Piyush Jain of Morningstar Investment Advisers, Cairn’s onshore oil assets are the best in class and from that perspective, it is a disappointment for its shareholders. But with this deal, Vedanta will get access to cash generating assets of Cairn, which will help repair its balance sheet, CNBC TV 18 report said.