Vedanta says its Cairn India Buyout Offer is Fair

The buyout deal, first proposed last month, is the latest effort by Vedanta to simplify a complex structure which Albanese has said has held back investor interest.

Published: 23rd July 2015 08:06 PM  |   Last Updated: 23rd July 2015 08:06 PM   |  A+A-

MUMBAI: Mining and energy group Vedanta Limited <VDAN.NS> said on Thursday its offer to buy out minority investors in Cairn India <CAIL.NS> was fair, dismissing reports that opposition from some small shareholders, including former owner Cairn Energy <CNE.L>, could scupper the deal.

Vedanta Chief Executive Tom Albanese, speaking by telephone from Zambia, said the group was engaging with all minority shareholders, though a vote on the $2.3 billion deal was likely to be held only in the last three months of 2015.

"In all cases, with every shareholder, we have had the engagement, as you would expect we would. In all cases, people recognise that it is still very early to make a decision," Albanese said, declining to comment on individual investors.

The buyout deal, first proposed last month, is the latest effort by Vedanta to simplify a complex structure which Albanese has said has held back investor interest.

Media reports over the past two weeks have said Cairn Energy and India's state-owned Life Insurance Corp, disagreed with Vedanta on valuation and could vote against the buyout deal. Together, the two hold more than 19 percent of Cairn India, and could potentially sink the current offer.

One Life Insurance Corp official said on Thursday the insurer had concerns about the exchange ratio, but had yet to take a decision on the deal.

Shareholders have questioned the timing, which coincides with a drop in Cairn's shares as oil prices have weakened, making for a more favourable merger ratio for Vedanta.

Albanese, however, rejected concerns among some minority shareholders that the deal would use Cairn's cash pile of around $2.6 billion simply to help pay off parent Vedanta's debt.

"Vedanta Limited in its own results presentation said back in May that it was intending to (refinance) its debt, in the current favourable markets," Albanese said.

"We do not need the merger to do that," he said, adding the main aim of the buyout was to simplify the Vedanta's structure.

Cairn Energy said on Wednesday that it continued to assess the proposal.

Vedanta Limited's parent company, Vedanta Plc <VED.L> bought a majority stake of just under 60 percent of Cairn Energy's Indian business, Cairn India, in a lengthy deal that completed in 2011. Cairn India has remained listed since.

The buyout deal is considered a test of India's new shareholder protection law, which requires an approval of more than half of the minority shareholders to go through.

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