Mining mogul Anil Agarwal plans to delist his flagship firm Vedanta Resources Plc from the London Stock Exchange (LSE) after buying out 33.5 per cent of non-promoter shareholders for about $1 billion.
Agarwal’s Volcan Investments Ltd, which currently holds 66.53 per cent of Vedanta, made a cash offer for 825 pence a share, a 14 per cent premium to company’s three-month volume weighted average price.
Vedanta Resources in a statement said it will recommend acceptance of the offer by the shareholders, who would also be entitled to a previously announced dividend of $0.41 per share.
The company no longer sees the London listing as necessary to access capital and the deal will simplify Vedanta’s corporate structure, it said.
The move comes weeks after the killing of 13 protesters in police firing at the firm’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.
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.
After delisting of Vedanta Resources, Agarwal would have just two listed companies in India — Vedanta Ltd which houses his sprawling copper, silver, lead, iron ore, power, aluminium mining and oil and gas, and Hindustan Zinc Ltd.
Vedanta Resources owns 50.1 per cent of Vedanta Ltd and has near 65 per cent holding in Hindustan Zinc. It also owns 79.4 per cent of Konkona Copper Mines in Zambia, Africa.
The delisting will take 2-3 months as it will have to make a firm offer in 28 days.
Vedanta said an independent committee, formed to review and evaluate the proposal, has indicated to Volcan Investments that it supports the offer and intends to recommend a firm offer to the shareholders.
Agarwal said Vedanta was the first Indian company to be listed on the London Stock Exchange in 2003.
“The London listing has served us extremely well since that time. However, given the subsequent growth of our underlying businesses and the maturity of the Indian capital markets, together with related feedback from our shareholders and other stakeholders, we have concluded that a separate London listing is no longer necessary to achieve the Vedanta Group’s strategic objectives.
“In taking this important step towards greater group simplification, we wanted to ensure that the independent shareholders of Vedanta Resources Plc were provided with the opportunity to exit on attractive terms, and I believe this possible offer will deliver on that objective,” he said.
Vedanta said the offer price of 825 pence per share values the company at 2.324 billion pounds and is 27.6 per cent higher than Friday’s closing price of 647 pence a share.
Volcan believes that the “offer price represents an attractive premium when considered on a relative basis compared to the recent share price of Vedanta and in the context of relevant precedent minority buy-out transactions in the United Kingdom”.
Also, the offer of cash provides an immediate and certain premium.
“Simplification of the corporate structure of Vedanta and its subsidiaries has been a key ongoing objective for the Vedanta Group, examples of which over the past several years include the merger of various Indian subsidiaries to create Vedanta Ltd, and the merger of Cairn India Ltd into Vedanta Ltd.
“Volcan believes that now is the right time to take another important step in simplifying the structure of the Vedanta Group by removing a duplicative stock exchange listing, which it believes to be in the best interests of all stakeholders,” the statement said.
Vedanta Resources was created to provide a platform to access a deeper pool of equity and debt capital in the United Kingdom and global markets, when predecessor entities were smaller and less liquid, and the Indian capital markets were less mature.
“Volcan believes that the original rationale for Vedanta is now less compelling, given the increased maturity of the Indian capital markets, together with Vedanta Limited’s significant growth,” it said.
The offer is subject to Volcan receiving any necessary external approvals for its financing structure and receiving satisfactory confirmations from Vedanta’s principal lenders that they do not object to the delisting of company’s shares.
Commenting on the possible offer, Deepak Parekh, Senior Independent Director of Vedanta, said: “Since being approached, the independent directors of Vedanta Resources Plc have evaluated the possible offer and have negotiated its terms. We are now pleased to confirm our intention to recommend the possible offer to Vedanta’s independent shareholders if and when it is formally made in the terms announced today.
This guy has issues with safety and violation of environmental regulations, however, that doesnt take away the fact that he is a shrewd businessman.
Probably the main reason he is delisting from london stock exchange is because of the crimes he has been commenting
They are making a lot of profit with all that transfer pricing with the high copper price….this is why windfall tax is the best option when the price is high we all win together when low we all feel it. Zambians have not learnt any lessons from this filthy Indian crook Anil, they continue to sell land and strategic assets the Copper-belt is poor whilst this crook and his Indian clan will forever be wealthy.
we had kicked out the whites too soon and we kicked KK too soon; KK would never have given about 80% control of the mine to this crook Indian;
Lungu has no vision, but he will still be there for a while because he is reigning in a situations where all these others are bangwele. Right now he is just thinking of what public property to sell next. Lungu fuseki!
The remaining 20.6% interest in KCM is held by ZCCM-IH. The question is: when Vedanta Resources pulls out London Stock Exchange, how much of the $1 billion will be given to ZCCM-IH as an exit compensation?
And how much will go to GRZ considering that 87.6% shares in ZCCM-IH are owned by the Zambian Government?
This is the sort of information LT was supposed to ask State House to give us after the meeting between President Lungu and Anil. The picture does not add value to us as the public but money matters. Please Amos Chanda, can you also avail LT answers to the two questions above, please???????????
Smart questions, smart analytics … yours is the most intelligent blog on this subject matter.
Mining mogul …my foot..this guy didnt even have $24m to his name when he was handed KCM..thats Indians for you they take and take imagine if it was the son of soil who owned KCM not this crook.
Mines were sold cheaply by MMD – Mwanawasa.
KK did alot but his time was over. His final years were not ok, the country was in a mess. Our parents struggling just to buy basics like mealie meal and cooking oil.
Apart from kk as president, President Lungu has build more public properties than any other president. Plz dont forget this man has just been in power for 3 years.
i cant understand this type of complaining ,where were the so called rich Zambians to buy the mines? right now how many can offer a billion dollars to buy? moving around in a second hand range rover sport aty rich,my foot. he has invested and made money . KK left the mines in shambles we had huge debts and the mines could not sustain the operations. so people need to think first before complain. we as a country are asking IMF to bail us out with a 1billion dollar you think we can spend that on a mine. This guy owns 20% of Anglo american thats huge so learn from him than busy speculating from free data . thats why mushota complains on how docile and petty we can be
The sale of KCM to this Indian is a big dent on Levy Mwanawasa’s legacy. Ichibumba did many good things but on this one he dropped the ball and the country will lose a lot for many years to come. Those of us who worked for the mines knew how profitable the mines were but now he can’t even pay suppliers let alone mine. How can you run a mine without seriously investing in mine development? Can you imagine even the company’s Kitwe Trades School has been operating without power because Zesco have disconnected power to the school due to lack of settling electricity bills. How can you teach Tradesmen theory only because without electricity they cant do any practicals.