U.K-listed India-focused miner Vedanta Resources PLC (VED.LN) is confident that minority shareholders will approve the proposed merger of its majority-owned Sterlite Industries Ltd. (500900.BY) and Sesa Goa Ltd (500295.BY) units, the company's chairman said Saturday.

"It is a very win-win [transaction] for everyone," said Chairman Anil Agarwal in an interview with Dow Jones Newswires.

He said the proposal marks an improvement from the one proposed in 2008, which was scrapped after facing some investor resistance.

That deal proposed streamlining Vedanta's holdings into copper and zinc, aluminum and energy, and iron ore divisions, a much more complicated transaction than folding Vedanta's various holdings into a single entity to create a diversified natural resources company that would own nearly all of Vedanta's holdings.

The only Vedanta holding not to be folded into the combined company is Vedanta's majority stake in Zambia's Konkola Copper Mines PLC. KCM will continue to be held apart from the merged entity since there aren't sufficent synergies to combine it with the other assets, Vedanta's chief financial office Tarun Jain told Dow Jones Newswires.

Agarwal said that the merger proposal would be very advantageous for minority shareholders since, for instance, a Sesa Goa shareholder would be exchanging shares in a company that is only focused on one commodity, iron ore, to a company that has a diversified portfolio of commodities.

"They should be very happy [because it] improves shareholder" value, he said.

Vedanta currently owns a 55% stake in Sesa Goa and a 58% direct and indirect stake in Sterlite Industries. After the merger, Vedanta will own a 58.3% stake in the combined entity.

Vedanta has proposed merging Sterlite into Sesa Goa to create a new company called Sesa Sterlite. Other units owned by Vedanta will 100% folded into the merged entity, including Vedanta Aluminium Ltd and The Madras Aluminium Company Ltd. Vedanta's 39% stake in Cairn India Ltd. (532792.BY) would also be transfered to the combined company.

The proposed merger envisages Sesa Goa issuing three shares for every five Sterlite shares, in a deal that would create the world's seventh largest global diversified natural resources company by earnings before interest, taxes, depreciation and amortization, or Ebitda with assets in oil and gas, zinc, iron ore, lead, aluminum and electricity.

Agarwal said he expected shareholders will be happy with the ratio since it has been independently verified by two auditors as fair. Mining titans Glencore International (GLEN.LN) and Xstrata PLC (XTA.LN) also proposed a merger earlier this month, but some of Xstrata's major shareholders have voiced concern that while the deal makes sense, the ratio is not attractive enough.

Agarwal said Sesa Sterlite could have a valuation of more than $20 billion once the deal is completed. The deal is expected to close toward the back end of the third quarter or fourth quarter of 2012 and needs both shareholder and regulatory approvals before it can close.

Vedanta shareholders are expected to vote on the deal at an extraordinary meeting in May while Sesa Goa and Sterlite shareholders are expected to vote on the deal at a similar meeting in June 2012.

-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; alex.macdonald@dowjones.com

   (Sourav Mishra in Mumbai contributed to this story.)
Glencore Xstrata (PK) (USOTC:GLCNF)
Historical Stock Chart
From Apr 2024 to May 2024 Click Here for more Glencore Xstrata (PK) Charts.
Glencore Xstrata (PK) (USOTC:GLCNF)
Historical Stock Chart
From May 2023 to May 2024 Click Here for more Glencore Xstrata (PK) Charts.