Anil Agarwal-controlled Vedanta Resources Plc is gearing up to acquire the government’s residual stake in Bharat Aluminium Company and Hindustan Zinc which were divested in 2001 and 2003 respectively. The government currently holds a 29.54% stake in HZL and a 49% in Balco.

Vedanta is learnt to have scheduled a general meeting of the Vedanta shareholders right after its forthcoming annual general meeting to be held at London on August 28th 2012 to take an approval from the shareholders to acquire the stakes in the 2 companies.

Sources said that the company would soon issue a circular to this effect. The circular contains a notice convening a general meeting of the shareholders wherein approval of Vedanta’s shareholders will be sought in connection with the transaction.

As per Vedanta Resources’ plan, once the proposed restructuring exercise of its various subsidiaries is over, a main holding subsidiary called Sesa Sterlite will be floated. This entity will hold 64.92% in HZL and 51% in Balco, currently held by Sterlite Industries.

As per the restructuring exercise, proposed in February this year, Vedanta Resources will hold 58.3% in Sesa Sterlite. In January this year, Vedanta had offered to buy out the government stake in the two companies at a valuation of INR 1,800 crore for Balco and INR 15,500 crore for HZL. However, the government did not agree to the pricing and wanted to sell off the assets at current market prices, which are higher. This has been the bone of contention between the two parties since then.

An analyst with a domestic brokerage said that since Vedanta itself is running the companies completely, what needs to be seen is whether the current buyout is done at a price which leads to earnings growth, else there is no positive.

Source - Dnaindia.com

(www.steelguru.com)