Indian metals tycoon Anil Agarwal has tabled a £778m cash offer to buy the 33.5 per cent of shares in Vedanta Resources (VED) he doesn’t already own. The deal values the debt-laden miner at a 28 per cent premium to the company’s undisturbed share price, or an equity valuation of £2.33bn.
If accepted, Vedanta will be folded into Volcan, a family trust owned by Mr Agarwal, which has held a controlling stake in the group since its London IPO in 2003. Shareholders on the register on 20 July will be entitled to receive the 41¢-per-share (31p) full-year dividend.
The takeover approach arrives at a challenging period for Vedanta. At the end of May, full-year results landed on the same day 13 people were killed protesting the expansion of a copper smelter in Tamil Nadu. Prior to the protests, operations at the smelter had already been suspended after Vedanta failed to secure renewed environmental approval. That followed the suspension of Vedanta’s lease for the Sesa Goa iron ore mine by India’s Supreme Court, pending a review of prevailing environmental standards and the financial terms of the state’s mining sector.
Operational issues come amid a period of straightened finances. In the year to March, cash profit growth failed to keep up with the rise in the top line, while net debt increased to $9.6bn. The group’s leadership is also set for another reshuffle, with AngloGold Ashanti chief Srinivasan Venkat set to take the reins from interim chief executive Kuldip Kaura at the end of summer.
Vedanta’s impending disappearance from the London Stock Exchange is likely to please UK shadow chancellor John McDonnell, who called for the group to be de-listed to remove a “cloak of respectability” that risked “further reputational damage to London’s financial markets from this rogue corporation”.
