UK's Vedanta Ups Total Offer Price To $4 Billion To Buy Out Indian Government's Stakes In Hindustan Zinc And Balco

 
on October 16 2013 1:37 AM
Vedanta Balco
Employees at work inside one of the BALCO plants. Vedanta Resources

Vedanta Resources (LON: VED) is planning to hike its total offer price to $4 billion (248 billion rupees) to increase its holdings, and buy out the Indian government's stakes, in Bharat Aluminum Company, or Balco, and Hindustan Zinc (BOM:500188).

The London-based mining conglomerate, which currently owns a 64.9 percent stake in Hindustan Zinc and 49 percent of Balco, has been in talks with the Indian government to acquire the remaining stakes, for more than two years. The Indian government holds a 29.5 percent stake in Hindustan Zinc and 51 percent in Balco. In January 2012, Vedanta had offered the Indian government $2.938 billion to acquire the state's stake in the two companies, but the government did not take the deal.

Anil Agarwal, Vedanta’s executive chairman, in a letter to shareholders said that the company currently is planning to offer $3.482 billion for Hindustan Zinc and $487 million for Balco, and the proposal will be submitted for shareholder’s approval during the company's Oct. 30 meeting in London, Press Trust of India, or PTI, reported. 

However, in his letter dated Oct.14, Agarwal also noted that the government has not yet accepted either offer and it is not clear whether the government intends to sell its holdings to Vedanta or to any other company.

"Accordingly, there is no certainty that the group will acquire all or any part of the Government of India's interests in Hindustan Zinc and/or Balco,” Agarwal said in the letter, according to the PTI report.

"If the entirety of the Government of India's interests are acquired, the group's interests in Hindustan Zinc and Balco would increase to 94.4 per cent and 100 per cent, respectively, and Vedanta's economic interests in Hindustan Zinc and Balco would increase to 55 per cent and 58.3 per cent, respectively," Agarwal said.

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