Anil Agarwal-promoted Vedanta Resources has sweetened its offer to buy Government’s residual stake in Hindustan Zinc and Balco. The company has increased its initial offer by over $40 million.
It has sought approval from the shareholders in the UK.
Currently, the Indian Government has 29.5 per cent stake in Hindustan Zinc and 49 per cent in Balco. Proceeds from the residual stake sale will be part of total disinvestment earning of the Government.
The Centre aims to mobilise Rs 55,000 crore from disinvestment during 2013-14, including Rs 14,000 crore in non- Government companies.
According to the regulatory filing at the London Stock Exchange, Vedanta has sought shareholders approval for spending limit on combined purchase of Government’s residual stake in HZL and Balco to $3.48 billion. For Balco, however, it has capped the spend at not more than $487 million.
On August 28, 2012, Vedanta had got its shareholders approval for acquiring the entire Government’s stake in HZL for $3.37 billion and in Balco for $550 million. With this, the net increase will be $40 million.
The present transaction value has been calculated at the exchange rate of Rs 62.13, Vedanta said, adding that this translates into over Rs 21,600 crore. Balco and Hindustan Zinc were strategically sold to Vedanta Group in 2000-2002. Though there was a call option for Vedanta, but it could not be exercised due to legal battle and other reasons.
Now, the Government legal officers have cleared the process. The Finance Ministry has also said that all legal hurdles have been cleared.
HZL is a listed company, while Balco is not. On Tuesday, shares of HZL closed at Rs 132.55 with a gain of over 2.3 per cent on the BSE.
Last January, Vedanta had offered to buy the Indian Government’s stake in Hindustan Zinc for $2.938 billion and Balco for $338 million. As part of the deal, Vedanta agreed to drop all litigation. The Indian Government has yet to accept the offer.
Vedanta said that there is no certainty that the Indian Government will accept the offer. Vedanta has called on shareholders to vote on the minority buyout proposals on October 30.