Sesa Goa shares fall 10%, Sterlite 3%

Shares of Sesa Goa and Sterlite Industries closed with losses -- while the iro ore miner lost 10.45 per cent, the metals major was down by 2.53 per cent – on the bourses today, following announcement of merger of the two companies by the parent Vedanta group.

Sesa Goa shares plummeted by 11 per cent to Rs 202.10 during the day on the BSE. The stock finally ended at Rs 203.60, down 10.45 per cent from the last closing price.

In the process, the market value of the company was eroded by Rs 2,065 crore to Rs 17,694 crore.

Similarly, shares of Sterlite Industries also declined by 2.53 per cent to Rs 115.65.

However, parent Vedanta Resources plc's stock was trading 0.53 per cent higher in the afternoon trade at the London Stock Exchange today.

Brokerage house Emkay Global Financial Services said, "We see the deal as positive for Vedanta, neutral to Sterlite and negative for Sesa Goa."

Another brokerage firm Prabhudas Lilladher said, "Proposed deal is negative for Sterlite and Sesa Goa shareholders."

Shareholders of Sterlite will get three shares of Sesa Goa for every five shares held as per the swap ratio fixed.

Eventually, they will become shareholders of Sesa Sterlite to be listed on bourses, after receiving regulatory approvals, including that of shareholders of the concerned companies.

"Prima facie, this merger ratio appears to be slightly in favour of Sterlite shareholders. And it appears that the merger ratio is slightly detrimental to Sesa Goa shareholders," Jagannadham Thunuguntla Strategist and Head of Research SMC Global said.

In a major revamp, metal and mining major Vedanta Resources on last Saturday decided to merge Sterlite Industries with Sesa Goa to create a USD 20 billion controlling entity for simplifying its group structure.

Merger of Sterlite Industries and Sesa Goa will lead to a new entity, Sesa Sterlite, which will be the seventh-largest natural resources company in the world.

... contd.

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