Tuesday, June 9, 2015

Minority Shareholders against Cairn India - Vedanta Merger

The relentless fall in Cairn India share prices since past couple of months in-spite of handsome recovery in crude oil smells fishy and hints at share price rigging to benefit the Anil Agarwal group so that the residual 40% public stake in Cairn India can be swapped with least number of Vedanta Ltd shares. Cairn India being the only pure crude oil private player listed in India, existing public shareholders can benefit in no way with this reverse merger and is intended to benefit only the Vedanta group.

In an article titles "Cairn India Stock Analysis", it was really surprising how Cairn India is trading at ridiculous valuations and available at only 4 years of cash flow. Crude oil outlook will also improve in couple of years and hence long term shareholders should defeat this merger. As per SEBI act on M&A of listed companies, a minimum of 2/3rd of public shareholders approval is required. LIC and Cairn Energy PLC holds around 20% while rest is being held by MFs and public. If you are against the merger please vote below and share your comments.

1 comment:

  1. The proposal, 1:1 share swap with 7.5% preffered shares of FV10, is only the offer AA group has made and is subject to minority shareholders approval. It's now upto us to accept or reject it. It is absolutely against our interest as being a cairn india shareholders we have the security of cash while shareholders of Vedanta Ltd runs a risk a going down the JP Associates or Jindal Steel way in future as they have loads of debt. Lets unite to defeat this proposal as in no way Cairn India shares are valued at 194. Few days back they paid cash to Twin Star holdings at 220 per share and they are now offering us shares of debt laden vedanta ltd at 194 per share valuation based on friday's closing and that too after 9 months. This is a complete non sense and it's the test of minority shareholders strength india after SEBI's amandment.
    In what could be a major blow to cairn India shareholders is that in future vedanta ltd will try to merge Hindustan Zinc but this time govt will want cash and no vedanta shares as 29.5% govt shareholding will be auctioned. Vedanta Ltd will end up paying huge amount of cash and loading up debt which will increase the debt burden of the company. It will be disaster for cairn shareholders if the merger goes through.

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