Cairn India slips over 5% intraday, Vedanta surges 4% on merger news

NEW DELHI: Cairn India plunged as much as 5.5 per cent to hit its 52-week low of Rs 170.60 in intraday trade on Tuesday, after media reports suggested that the metal and mining giant Vedanta is believed to be in the final stages to announce a merger of its subsidiary Cairn India, a listed oil and gas exploration company, with itself.

Shares of Vedanta were on a roll, surging 4% in intraday trade.

Cairn India ended the day at Rs 172.60, down 4.46%. The stock ended the day at Rs 182.55, up 3.11%.

The move will give the parent access to Cairn's cash and help reduce debt, two people aware of the plan told ET. The two are shortly expected to inform shareholders about the proposed transaction.

Based on weighted average stock prices of the two companies for the past six months, Cairn India shareholders should receive about 1.1 share of Vedanta for each share of Cairn - in other words 11 shares of Vedanta for every 10 Cairn shares.

Responding to queries from ET, a Vedanata group spokesperson said, "Vedanta would like to state that in line with its stated strategy to create long term and sustainable shareholder value, the group is always evaluating and considering opportunities to simplify the Group corporate structure."