Anil Agarwal makes $1 billion offer to delist Vedanta from LSE

Mining mogul Anil Agarwal’s family trust today made a firm $1-billion offer to buy 33.47 per cent non-promoter shares of Vedanta Resources in a deal that values the conglomerate at $3.07 billion.

“Under the terms of the offer, Vedanta shareholders will receive $10.89 per share in cash for each Vedanta share,” the company said in a regulatory filing detailing about the $1-billion offer. In addition, the shareholders will be entitled to receive a dividend of $0.41 per share in respect of the 12 months ended March 31, 2018.

“Taken together, the offer price and the FY2018 dividend in aggregate represent a total value of $11.30 per share, which on the basis of the announcement exchange rate represents an illustrative premium of approximately 32.4 per cent to the closing price of 647 pence per Vedanta share on June 29, 2018,” it said.

Vedanta had on July 2 announced Agarwal’s plans to delist the company. Agarwal’s Volcan Investments, which currently holds 66.53 per cent of Vedanta, made a cash offer for 825 pence a share.

Vedanta, which owns copper, aluminum, iron ore, oil and steel businesses, was the first Indian firm to list on the London Stock Exchange in 2003. It has lately been facing environmental pressure on its operations.

Tuticorin protests

As many as 13 protesters were killed in a police firing at the company’s copper smelter plant in Tamil Nadu last month that led to political opposition to the company in the UK and drop in its share price. There were demands from some quarters that the firm be delisted from the London Stock Exchange.

The protesters were demanding the closure of Vedanta’s copper smelter plant as they saw it as polluting the environment when they were fired upon by the police.

Agarwal, however, has denied any link between the delisting and the protests. There is “no link at all” with the Tuticorin incident, he had told PTI earlier this month. “This is driven by the desire to simplify the corporate structure.’’

In the stock exchange filing today, Agarwal termed the offer as “a natural progression of our journey to simplify the Vedanta Group’s corporate structure.”

‘ Simplifying Vedanta’s corporate structure’

Stating that the London listing has served the firm well since 2003, he said given the subsequent growth of underlying businesses and the maturity of the Indian capital markets, a separate London listing is no longer necessary to achieve the Vedanta Group’s strategic objectives.

The company no longer sees the London listing as necessary to access capital and the deal will simplify Vedanta’s corporate structure.

“In taking this important step towards greater group simplification, we wanted to ensure that the independent Vedanta shareholders were provided with the opportunity to exit on attractive terms, and I believe this recommended offer will deliver on that objective,” he added.

Volcan Investments' stake

If Volcan succeeds in increasing its stake to 90 per cent or above, it is likely that Vedanta will be delisted from the London Stock Exchange, making it a private company.

Volcan is a private company with limited public information on its finances. In 2017, it had raised an estimated $4.4-billion debt through the issue of convertible notes to buy 19.35 per cent equity stake in Anglo American plc, pledging 33 per cent of Vedanta shares as security for annual interest payments of $185 million.

In the filing, Vedanta said the cash shareholders will be financed through a $1.1-billion loan from Credit Suisse AG, Singapore Branch, and Standard Chartered.

If his offer goes through, Agarwal will be left with just two Mumbai-listed companies -- Vedanta Ltd, that houses his sprawling copper, silver, lead, iron ore, power, aluminum mining and oil and gas business, and Hindustan Zinc Ltd. Vedanta Ltd also has an ADR listing on the New York Stock Exchange.

Vedanta Resources was listed on the London Stock Exchange in December 2003. It had raised just over 500 million pounds from a sale of shares at 390 pence. Vedanta Resources owns 50.1 per cent of Vedanta and has near 65 per cent holding in Hindustan Zinc. It also owns 79.4 per cent of Konkona Copper Mines in Zambia, Africa.

Volcan is a holding company wholly owned by the Anil Agarwal discretionary trust. Agarwal is also Anglo American’s biggest shareholder with a nearly 20 per cent stake through Volcan.