Vedanta merges Indian units to create firm worth $20bn
VEDANTA, the FTSE 100 mining giant, has announced plans to merge several of its Indian subsidiaries to create a new $20bn (£12.6bn) business.
The group, controlled by British-based tycoon Anil Agarwal, has over a dozen Indian units producing oil to aluminium and copper to zinc.
The consolidation is expected to lead to the creation of a new business that would have an implied market value of around $20bn.
Vedanta said, as a first step, it will merge non-ferrous metals producer Sterlite Industries into sister concern and iron ore miner Sesa Goa.
The boards of the companies have approved the issue of three shares of Sesa Goa for every five shares held in Sterlite.
Its unlisted unit Vedanta Aluminium, along with Madras Aluminium, will then be transferred to the merged company, to be named Sesa Sterlite.
Vedanta’s 38.8 per cent holding in oil and gas producer Cairn India, which it acquired last year, will be transferred to Sesa Sterlite, along with related debt of $5.9bn. Sesa Goa already holds 20 per cent in Cairn India directly.
“The restructuring was necessary, especially after the acquisition of Cairn India, because it was a large acquisition and they needed to do things in a much more organised way in India,” said Jagannadham Thunuguntla, head of research at SMC Investments .
After the share transfer, Sesa Sterlite would be listed in India and also list American Depositary Shares in New York. Vedanta will own 58.3 per cent in Sesa Sterlite post-restructuring.
“This transaction is a natural evolution, leading to simplification of the group’s structure,” said Vedanta.