Recently, oil prices have been moving up. Also, Cairn got an extension on its Barmer block in Rajasthan. This should have had a positive impact on Cairn stock - however, what's happening is that the stock is coming down!
The reason is that Copper and other metal prices have been coming down.
Because of the merger between Cairn and Vedanta, and because of the way the terms have been set, Cairn and Vedanta are moving together. And since Vedanta is under pressure, Cairn also has been coming down. And this makes Cairn available at a very attractive price relative to the prospects for the company!
However, even if you buy Cairn at an attractive price, it will be converted to Vedanta when the merger closes! At which point, you will lose the benefit :-)
How would you play this transaction?
The reason is that Copper and other metal prices have been coming down.
Because of the merger between Cairn and Vedanta, and because of the way the terms have been set, Cairn and Vedanta are moving together. And since Vedanta is under pressure, Cairn also has been coming down. And this makes Cairn available at a very attractive price relative to the prospects for the company!
However, even if you buy Cairn at an attractive price, it will be converted to Vedanta when the merger closes! At which point, you will lose the benefit :-)
How would you play this transaction?
Cairn - Vedanta - interesting situation
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