Stocks

Analysts concerned at Cairn-Vedanta deal delay

Our Bureau Mumbai | Updated on November 12, 2017

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Analysts are expressing concern over the delay in Cairn India-Vedanta Group deal.

Following the Centre's move to refer the proposed takeover of Cairn India by Vedanta to a Group of Ministers (GoM), Cairn Energy Plc on Thursday announced extension of the deal deadline to May 20 against the original deadline of April 15.

This extension, ostensibly, has been done to facilitate the completion of the open offer by Sesa Goa (a Vedanta Group company) to Cairn India's minority shareholders.

“This deal has not gone anywhere even after eight months. I am getting to think that this deal will fall through,” a Reuters report quoting Mr Eric Mookherjee, Paris-based Chairman of Shanti Asset Management, which owns convertible bonds of Vedanta Resources, said.

“It is not exactly positive for the potential foreign direct investment.”

Elara Securities said in its February research report: “Cairn management seems still uncertain on the deal completion timeline, but has declared that minority shareholders will be protected as the board would not accept a value-destroying proposition from the Oil Ministry. Despite this assurance, knowing the slow pace of proceedings in the Government, we remain wary on events that may further unfold.”

A Religare report, which maintained sell (February report) with a target price of Rs 285 on Cairn India, said, “Not taking away the fact that Cairn is an operationally sound organisation and has delivered commendable results, we believe that lack of clarity on the timeline of Cairn Plc-Vedanta deal will remain a overhang on the stock.”

Meanwhile, Sesa Goa has moved ahead with the open offer proposal for Cairn India's stake.

Sesa Goa's statement to the stock exchanges has said that the open offer would open on April 11 and close on April 30 and at an offer price of Rs 355 a share.

According to analysts, the open offer price of Rs 355 could have been revised higher by the company as it does not justify the current market price conditions.

“The open offer price is a transaction value; the rate at which the deal is done,” said Mr Sudip Bandyopadhyay, President, Destimoney Securities.

Published on April 07, 2011

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