Vedanta: Delisting approval means….

Billionaire Anil Agarwal-controlled Vedanta has received the shareholders’ nod for delisting the company from the domestic bourses.
On Thursday, the world’s largest miner informed bourses about the same, which will be emerge as a setback for retail investors.
It was among few good stocks that provided good opportunity to secure exposure in mining sector with strong fundamentals and at attractive valuations.

Besides, being a strong dividend yield provider, Vedanta was also one of the large capital stock as well as among safe bet for the risk averse investors.
With the company receiving the shareholders’ approval, the local investors will now have to search similar options in the state-owned companies and few private sector firms.
Vedanta was unique stock, in the sense it offered exposure to mining and also oil & gas sector at the same time.
On Thursday, Vedanta informed that the special resolution (for voluntary delisting of the equity shares of the company from BSE Ltd (BSE) and National Stock Exchange of India Limited (NSE)) has been approved by the members with requisite majority.

The approval is considered to have been received on the last date specified for remote e-voting i.e., Wednesday, June 24, 2020.
While 93.342% of the votes were in favour of the proposal, 6.658% were against it. The proposal required approval of at least 66.7% of minority shareholders.

Last month, Vedanta had initiated the process for seeking shareholders’ approval for delisting.
The firm, through a postal ballot, had sought shareholders’ nod to delist after Agarwal’s Vedanta Resources offered to buyout about 49.9% of public shareholding at a price of Rs 87.5%.
Vedanta Resources (VRL), which owns 50.1% of Vedanta, offered to acquire all of the balance 49.9% shareholding held by the public and delist the company.

Going ahead the most important aspect which will be important in this reverse book building process will the offer price and its acceptance by the investors. As know earlier already FIIs and Domestic funds holds around 45% with retail holding only around 8% stake. So the call taken by the institutional shareholders will decide the fate of this offer
Going ahead the new few steps which will take place now will be taking approval from the stock exchanges. Thereafter Promoters will make Public announcement and dispatch letter of offer to shareholders after which public shareholders will tender bids at which they would like to exit the company.
The exit price shall be considered at which promoters stake can increase to atleast 90% of the paid up capital excluding shares reserved for ADS.

Promoters may or may not agree to the exit price. If promoter accepts, the exit price as determined above, announcement is made and payment is done and shares delisted.
If promoter rejects, then they might make a counter offer within 2 days of discovery of exit price. If the counter offer is accepted by public shareholders, delisting process continues, if counter offer is rejected, the delisting fails.
Hence we can expect some further interesting developments possibly in a months time as regards this delisting offer ahead.

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