Mumbai: Vedanta Resources on Saturday proposed to merge all its businesses in India and abroad, sans the African copper mine, into a single entity 'Sesa Sterlite', move aimed at simplifying the group structure.
This move will place the consolidated firm among the world's top seven natural resources companies.
The proposed merger, subject to approvals from regulators and shareholders, would be completed by the end of 2012 and ensure an annual Rs 1,000 crore synergy benefit for the consolidated entity, Vedanta Resources' Chairman Anil Agarwal said here.
The consolidation plan, which the management hopes to be earnings accretive for Sesa Goa, Sterlite and Vedanta, includes merger of Sterlite with Sesa Goa at a share swap ratio of 5:3.
Besides, Vedanta Aluminium and Madras Aluminium Company will be consolidated into Sesa Sterlite.
Also, Vedanta's direct holding of 38.8 per cent in Cairn India will be transfered to Sesa Goa, together with the associated debt of USD 5.9 billion, at cost, a company statement said.
Sesa Sterlite will have Cairn India, Hindustan Zinc, Skorpion and Lisheen, Bharat Aluminium, Talwandi Sabo Power, VAL Power and MALCO Power, Western Cluster and Australian Copper Mines as it subsidiaries.
Vedanta Resources will have 58.3 per cent stake in the proposed merged entity. (
The merger is in line with the company's strategy to consolidate and simplify the Group structure and eliminate the cross holding. It will also improve capital structure and cash
fungibility, besides allocation and access to capital.
BHP Billiton, Vale, Rio Tinto, Glencore Xstrata, Anglo American and Teck are the top six global natural resources companies as per their EBITDA (earnings before interest, tax, depreciation and amortisation) in 2011.
The Anil Agarwal-led metal and mining major Vedanta Resources, however, has kept its African operations outside the purview of the merger proposals and plans to keep it as a direct subsidiary in which it has 79.4 per cent stake.
Shares of Sterlite had closed at Rs 118.65, up 3.17 per cent, while Sesa Goa settled marginally lower at Rs 227.35 on the BSE on Friday.
Both the companies are also listed on the National Stock Exchange.