Bloomberg News

Sterlite Falls as Investors Seek Sesa Goa Clarity: Mumbai Mover

February 22, 2012

Feb. 22 (Bloomberg) -- Sterlite Industries (India) Ltd., controlled by billionaire Anil Agarwal, erased gains and fell in Mumbai as investors awaited details on the reported merger with group company Sesa Goa Ltd. Sesa shares rose.

Sterlite shares declined as much as 2.7 percent to 124.85 rupees, the lowest price in two weeks, after rising as much as 3 percent. The stock traded at 125.75 rupees as of 11:26 a.m. local time. Sesa rose as much as 3.2 percent to 254.80 rupees and were at 253.80 rupees. The benchmark BSE India Sensitive Index dropped 0.2 percent.

Vedanta Resources Plc, parent of Sterlite and Sesa, said yesterday in a statement its strategy is to simplify and consolidate its corporate structure and it reviews such options on an “ongoing basis.” The statement came after India’s CNBC- TV18 moneycontrol.com website reported yesterday Vedanta is seeking to combine Sterlite and Sesa. The share swap ratio may be 2:3, the Business Standard reported today.

“There’s uncertainty about the kind of restructuring the group is planning and investors may book profits before taking a fresh view on the stock,” said Bhavesh Chauhan, an analyst at Angel Broking Ltd. in Mumbai. “Sterlite has a complicated business structure and while it may make sense to simplify it, we can’t say which company will gain from such restructuring based on news reports.” Chauhan has a “buy” rating for Sterlite.

Sesa Managing Director Prasun Kumar Mukherjee declined to comment on the news reports.

Cairn India Ltd., which Vedanta bought in December after paying $8.67 billion for 58.5 percent of the company, including 20 percent held by Sesa, may also be combined with the new entity, Business Standard reported. Sterlite would become the holding company for Vedanta’s Indian operations, according to the CNBC-TV18 report.

--With assistance from Firat Kayakiran in London. Editors: Indranil Ghosh, Ravil Shirodkar

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net


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