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Vedanta Resources chairman offers $1bn to take firm private (VED)

Vedanta Resources (LSE:VED) chairman Anil Agarwal’s family trust has offered around $1bn cash to buy the miner, sending its shares 4.9pc higher to 817.6p. Volcan Investments, which owns around 67pc of Vedanta at present, has offered $10.89 or c.825p per share, a premium of about 6pc to the stock’s Monday close, to buy the rest of the business.

The deal, which values Vedanta at more than $3bn, will also entitle Vedanta’s shareholders to a $0.41 dividend per Vedanta share. As such, the offer price and dividend represent a total value of $11.30 per share. According to Reuters, Vedanta’s shares have risen 20.5pc since Agarwal made a possible offer at the same price on 2 July.

In today’s announcement, Volcan said it believes its bid offers certainty for investors, a simplification of the Vedanta Group structure, and retains the ability for shareholders to reinvest proceeds in the Vedanta group. An independent committee advised by Lazard unanimously recommended today that Vedanta’s shareholders accept the offer, describing it as ‘fair and reasonable’.

Vedanta Resources is a UK listed global diversified natural resources company focused on aluminium, copper, zinc, lead, silver, iron ore, oil and gas and commercial power generation businesses. It is principally located in India, with around 58pc of its revenue last year being generated in the country. It also has operations in Zambia, Namibia, and South Africa.

Agarwal said: ‘Following the Possible Offer Announcement, we are pleased to announce this recommended Offer for Vedanta Resources, which is a natural progression of our journey to simplify the Vedanta Group’s corporate structure. We are very proud to have been the first Indian company to be listed on the London Stock Exchange in 2003, which was a major milestone for the Vedanta Group. 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 Vedanta Shareholders were provided with the opportunity to exit on attractive terms, and I believe this recommended Offer will deliver on that objective.’

Deepak Parekh, senior independent director and chairman of the independent committee, added: ‘It is the view of the independent committee that this is an attractive offer for independent Vedanta shareholders. It secures delivery of future value today in cash, whilst providing shareholders with the ability, should they choose, to retain exposure to the Vedanta Group growth story by reinvesting all or part of their offer proceeds in Vedanta Limited.

‘The increased maturity and liquidity of the Indian markets has diminished the rationale for maintaining a UK listed entity making this the next logical step in the Vedanta Group’s long-stated objective to simplify its corporate structure, particularly as the realisation of value at Vedanta Resources is impeded by the complex corporate and financing structure of the Vedanta Group.’

Author: Daniel Flynn

The author does not own shares in the company mentioned in this article

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