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Cairn India Gains 3% After Last Week's Big Selloff

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Cairn India Gains 3% After Last Week's Big Selloff
Cairn India shares rose as much as 3 per cent on Monday amid value-buying to be among the top Nifty gainers. Cairn India shares had fallen nearly 9.5 per cent in the past week as global oil prices took a tumble to slip below $60 for the first time since January.

Analysts also say the Cairn merger deal could be sweetened further even though Vedanta said that it remains confident of closing the merger deal with Cairn India by March 2016.

Last month, Vedanta had announced to merge its oil exploration arm Cairn India into itself through an all-share deal and proposed to offer one share of Vedanta against one share of Cairn to the minority shareholders of the oil exploration firm. Cairn shareholders have also been offered one redeemable preference share of Rs 10 face value with 7.5 per cent annual dividend for each share held in the company.

Cairn has cash and cash equivalent of about Rs 17,000 crore on its books while Vedanta has debt of over Rs 37,000 crore.

TS Harihar, chief executive and founder of HRBV Client Solutions Private, sees the Cairn-Vedanta merger going through as it would make Cairn a diversified commodities player. "The marriage makes a lot of sense but the deal could be sweetened further," he said.

The merger deal requires the approval of majority of the minority shareholders of Cairn India. Currently, LIC and Cairn Energy Plc (the erstwhile promoters of Cairn India) are the two biggest minority shareholders in the oil exploration firm with a stake of 9 per cent and 10 per cent, respectively.

"We are in regular touch with the shareholders of both the companies and the response has been very encouraging. The market has embraced the proposed merger and we are confident that the shareholders will approve the decision," Tom Albanese, CEO of Vedanta, told Press Trust of India on the sidelines of the company's 50th Annual General Meeting.

Shares of Cairn India ended 1.75 per cent higher as compared to a 1 per cent gain in Nifty.


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