Cairn India agreed Monday to merge with India-based Vedanta Limited in an all stock transaction.
Under the deal, minority shareholders of Cairn India will receive one equity share in Vedanta Limited and one redeemable preference share in Vedanta Limited with a face value of INR 10.
The redeemable preference shares will have a tenure of 18 months from issuance with a 7.5 percent per annum dividend and a redeemable face value of INR 10 per share for cash at the end of the tenure.
According to Vedanta, the deal has an implied premium of 7.3 percent over Cairn India’s previous close.
No shares will be issued to Vedanta Limited or any of its subsidiaries for their shareholding in Cairn India.
“The merger with Vedanta Limited will generate additional value for our shareholders and de-risks Cairn India by providing access to a portfolio of diversified Tier-I, low cost, long-life assets, to deliver significant near term growth. Our Rajasthan fields continue to remain our core asset,” Cairn India CEO Mayank Ashar said.
Vedanta said the company’s strategy remains unchanged and it will continue to “focus on delivering attractive growth, sustainable development and long-term value for all shareholders.”
The deal is expected to be completed during the first quarter of 2016.