<div><em>The scheme of arrangement submitted by the company said the proposed merger will also provide stability and enhancement in earnings and cash flow, says <strong>C H Unnikrishnan</strong></em><br><br>The proposed merger of oil and gas subsidiary Cairn India into the parent Vedanta Ltd will enable an enhanced diversification of the group as a global natural resources player, says Vedanta in its scheme of arrangement submission to Indian stock exchanges. </div><div> </div><div>The company has on Thursday (25 June) filed the details and the related documents of its scheme of arrangement for the merger to BSE and NSE seeking the exchanges’ approval of the merger.</div><div> </div><div>The scheme of arrangement submitted by the company said the proposed merger will also provide stability and enhancement in earnings and cash flow besides operational effectiveness and cost optimisation. Apart from simplifying the structure of the group, the merger with Cairn will also result in improved allocation of capital at lower cost and also a broader access to capital market as the consolidated group will have a stronger balance sheet, Vedanta said in the scheme of arrangement documents, reviewed by <em>BW|Businessworld</em>. </div><div> </div><div>Vedanta had in the second week of June announced its proposal to merge its majority owned subsidiary Cairn in to itself. Under the merger offer, the shareholders of Cairn India will receive one Vedanta share for every Cairn India share they hold and one preference share with a coupon of 7.5 per cent.</div><div> </div><div>Vedanta, the flagship of UK-based a metal and mining conglomerate Vedanta Resources Plc, currently holds 59.9 per cent stake in Cairn. The amalgamation of these companies engaged in two different areas such as metals and energy will combine their business activities and operations under one single company. Vedanta is currently a metals and mining company with business interests in copper, iron, aluminium and zinc, besides power generation. While Cairn focuses on oil and gas exploration, development and production. </div><div> </div><div>The merger requires approvals from the shareholders of both the companies apart from regulatory and judiciary approvals from Securities and Exchange Board of India (SebiI) and the High Court respectively. </div><div> </div><div>Shortly after the announcement of the merger plan, investor community including large minority holders in Cairn—Life Insurance Corporation (LIC) and Cairn Energy, had raised concerns about the valuation of Cairn and the share swap ratio for the merger.</div><div> </div><div>LIC currently owns 9.06 per cent stake in Cairn making it the second largest minority shareholder in the oil and gas company after Cairn Energy, which owns 9.82 per cent. For the proposed merger to go through, at least 50 per cent of the minority shareholders have to vote in favour of the deal. </div>
