Vedanta merges Indian units
Vedanta Resources, the FTSE-100 miner, has merged its Indian businesses in a move designed to save the group $200m a year in overheads and running costs.
Vedanta's board has long felt that the company was undervalued due to a complicated structure of subsidiaries that has confused City investors. Streamlining that structure is expected to boost the share price, which rose 4.5 per cent on Friday when rumours of the move spread around the Square Mile.
Vedanta confirmed the plans yesterday, which will see its non-ferrous unit Sterlite Industries merge with iron ore miner Sesa Goa under the banner Sesa Sterlite. Other parts of the group, including a majority stake in oil & gas group Cairn India that cost Vedanta $8.67bn (£5.5bn) last year, will transfer to the new entity.
Nearly $6bn of Vedanta's debt burden will also be transferred to Sesa Sterlite, which will boost the parent company's credit ratings.
Due to its varying shareholdings in each business that becomes part of Sesa Sterlite, Vedanta will own 58.3 per cent of the combined Indian unit. On its own, Sesa Satellite will become the world's seventh biggest natural resources company by certain measures and will be listed primarily in India.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies