Agarwal’s offer to buy out minority groups is an effort to streamline Vedanta’s structure.
Vedanta Resources Plc surged by a record after billionaire shareholder Anil Agarwal said he’ll offer to buy out minority investors as part of efforts to streamline the Indian commodities group’s structure.
Agarwal, whose Volcan Investments Ltd already owns 66.5 per cent of Vedanta, intends to cancel the company’s London listing as it no longer needs to rely on the access to UK capital, it said in a statement Monday. The billionaire, who is also mining giant Anglo American Plc’s biggest shareholder, has made a series of moves to consolidate Vedanta’s holdings, including a merger with Cairn India Ltd last year.
The offer, which values Vedanta Resources at £2.33 billion ($3.1 billion), follows a tumultuous few months for the commodities group. Its shares plunged in May as Vedanta Ltd, in which the London-listed company owns just over 50 per cent, was forced to shut a copper smelter in southern India following deadly protests. Earlier this year, a court ordered a halt to iron ore mining in Goa on environmental concerns.
Vedanta will recommend a cash offer from Volcan of 825 pence a share, the company said in a statement Monday. The offer is a premium of 14 per cent to Vedanta’s three-month volume weighted average price, it said. Shareholders will also be entitled to a previously announced dividend of $0.41 per Vedanta share.
Vedanta Resources jumped as much as 28 per cent to 828.8 pence on Monday, the biggest gain since its listing in 2003. The stock traded at 821.8 pence at 9:09 am in London.
While the offer is a 28 per cent premium to Friday’s closing price, Vedanta’s shares were trading above 850p before the drop in May.
“It’s not full value,” said Tim Huff, director of equity research at Canaccord Genuity Ltd. “But it’s a relatively good outcome.” -Bloomberg