Vedanta: Taking private

Billionaire Anil Agrawal owned Vedanta will soon be delisted from the exchanges, meaning investors holding shares of world’s largest miner will have to surrender their shares to the promoter who wish to take their company private.
The move is aimed at further simplifying the corporate structure and help service debt better. With aluminium and oil prices remaining gloomy for too long and no one putting money in it, the promoters decided that it is best to delist.

The promoters of Vedanta have offered to buy out all the public shareholders in the company at an indicative price Rs 87.50 per share, which is roughly 10% higher than the stock’s closing price of Rs 79.60 on Tuesday.
At present, promoters hold 51.06% in the company and the remaining 48.94% is held by public shareholders. Assuming all shares are accepted at the indicative offer price, the promoters will have to pay Rs 16,200 crore.
The promoter and members of the promoter group, Vedanta Resources (VRL) has expressed their intention to, either individually or along with one or more subsidiaries, acquire all fully paid-up equity shares of the company held by the public shareholders and consequently voluntarily delist the equity shares from the BSE and NSE.
The company’s board will be meeting on May 18 to consider the delisting proposal. Among major institutional investors in Vedanta, LIC holds 6.37%, ICICI Prudential Equity Arbitrage Fund holds 5.03%, and Citibank New York, NYADR Department holds 4.37%.

Meanwhile, Hindustan Zinc, a wholly-owned subsidiary of Vedanta, will continue to remain listed on the Indian
Presently, Vedanta has cash reserves of around Rs 12,264 crore, which includes cash from subsidiaries but not joint ventures like Hindustan Zinc Ltd., Hindustan Zinc International Ltd. and Balco. This doesn’t include dividend from Hindustan Zinc, which may be announced soon.

The company has cash amounting to Rs 35, 000 crore, which includes Hindustan Zinc and its subsidiary along with its joint venture in Balco as on Dec. 31, 2019, according to company filings. It has net debt of Rs 58,500 crore.
As on 31st March the shareholding is as follows –
Promoters- 50.14%, Public – 49.48%, (out of which MF- 33.97%, Retail – 7.26%, HNIs- 0.28% & FIIs – 15.15%)
Therefore, to make this offer successful Vedanta needs to acquire 40% shares from public.

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