Vedanta Group may shell out INR 21,635 crore up to 25% more than planned earlier for buying the Government’s remaining stakes in Hindustan Zinc and Balco as its previous offers have not been accepted so far.
Vedanta has called shareholders meet on August 28th 2012 in London alongside its annual general meeting to seek nod for the sweetening of its offers for acquiring the remaining government stakes in the 2 firms.
Vedanta spokesperson did not respond to the queries. If it goes through, this deal alone could meet over 72% of the government’s disinvestment target of INR 30,000 crore for this year.
Vedanta had acquired 51% stake in Balco in 2001 and 64.9% stake in Hindustan Zinc Limited during 2002 to 2003. Vedanta had acquired 51% stake in Balco in 2001 and 64.9% stake in Hindustan Zinc Limited during 2002 to 2003. The group in January had offered INR 15,493 crore for buying 29.5% in HZL and INR 1,782 crore for 49% residual holding in Balco. After shareholders approval, the company Board would have the powers to raise the offer price up to INR 18,606.10 crore for HZL and up to INR 3,028.78 crore for Balco.
As the Government of India has not to date accepted the Company’s offers approval from shareholders is being sought on the basis that the Company is authorized to negotiate the acquisition of the entirety of the GoI’s interest in HZL for an aggregate consideration not more than 15% higher than the price offered and in Balco for an aggregate consideration not exceeding USD 550 million.
The 15% increase in the previous offer of USD 2.938 billion for which shareholders’ nod has been sought amounts to USD 3.378 billion. For Balco’s remaining stake, the company has pegged the new price at USD 550 million an increase of 62.72% from the offer of USD 338 million made in January.
Taken together, it becomes 19.92% increase in the offer price of January in US dollar terms. The offer gets sweetened by 25.24% in Indian currency at Vedanta’s conversion price of dollar rupee of August 7th 2012 at INR 55.0688 for a dollar.
According to the company, after making the offers for the two firms in January it has written to the government twice in April and July. The offer has not been accepted yet. The shareholders approval would allow it to complete the transactions in a timely manner. The Anil Agarwal led firm is being advised by J P Morgan Cazenove for the two transactions.
Source - Press Trust of India
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