Miner Vedanta Resources (VED.L) is boosted this morning after reports emerged of a possible merger of its Indian subsidiary company Vedanta Resources India with Cairn India. According to reports this morning the two companies are in final discussions on the merger which could be completed by next march 2016.
Vedanta Resources (VED.L) said earlier today that “it is committed to maintaining its premium listing on the London Stock Exchange and will make appropriate disclosures as and when required”.
Vedanta Resources (VED.L) holds approximately a 60% stake in Cairn India already and the deal could be completed to access further cash and reduce debt with analysts and Societe General bank speculating that the deal could give Vedanta access to approximately $2.7Bln held in net cash at Cairn India.
Commented on the reports Societe General said “If confirmed, today’s media reports would indicate that Vedanta is once again endeavouring to simplify the group’s corporate structure and ease its debt concerns. With Cairn India now also held liable for the disputed capital gains tax on Cairn Energy, this makes resolution of the tax dispute a common cause for both parties. We think that while the Indian tax dispute is ongoing, Vedanta is the only potential acquirer that would still see material value in Cairn Energy’s stake in Cairn India”
Vedanta Resources (VED.L) is trading up around 5% this morning on the back of the reports at 569.50p