Vedanta’s Agarwal bids to take U.K. company private

A separate London listing is no longer necessary to achieve Vedanta Group’s goals, said Anil Agarwal, chairman, Vedanta Resources, which is set to delist its shares from the London Stock Exchange.

“The London listing has served us extremely well …. however, given the subsequent growth of our underlying businesses and the maturity of the Indian capital markets, together with related feedback from our shareholders and other stakeholders, we have concluded that a separate London listing is no longer necessary to achieve the Vedanta Group’s strategic objectives,” Mr. Agarwal said in a statement.

The independent committee of Vedanta Resources’ board, set up to evaluate the proposal to delist the firm from the London Stock Exchange, and Volcan, the holding company wholly owned by Anil Agarwal’s discretionary trust, said they had agreed in principle on the key terms of a possible cash offer to acquire minority shares accounting for 33.47% of the capital, valuing the firm at £2.325 billion.

‘28% premium’

The offer of £8.25 a share is a near 28% premium on the closing price of Vedanta Resources on Friday. Investors would also receive the 41 U.S. cents per share dividend for the year ending in March. Volcan currently owns 66.53% of Vedanta’s total share capital. Shares of Vedanta Resources had risen 26% by afternoon on the exchange.

The committee is set to recommend the offer to independent shareholders. If the move is successful, Vedanta would make an application to delist its shares from the exchange and from the Financial Conduct Authority’s list. The delisting could take place 20 business days after Volcan receives acceptances of its firm offer, or acquires a majority of the shares from independent shareholders.

The committee added it would be recommending the cash offer because of the certainty it provided and the ‘attractive’ valuation. The move would also help simplify Vedanta’s structure, in the wake of other such moves, including the merger of various Indian subsidiaries into Vedanta Limited and the merger of Cairn India Limited into Vedanta Limited. “Volcan believes that now is the right time to take another important step in simplifying the structure of the Vedanta Group by removing a duplicate stock exchange listing, which it believes to be in the best interests of all stakeholders.”

While the original rationale for the London-listing was to access the deep pool of equity and debt capital in London, the rationale was “less compelling,” given the increased maturity of the Indian capital markets, Vedanta said.

Pressure has built on Vedanta Resources in recent months in London, particularly following the deaths of some protesters in police firing in May in Thoothukudi where Vedanta’s Sterlite Copper factory is located. Britain’s opposition Labour party called for the company to be delisted from the London exchange to “remove its cloak of respectability.”

The company has in the past faced concerns from investors such as the Church of England, which in 2010 sold its stake in the firm, citing its “respect for human rights and local communities.”

Zambian protests

Vedanta Resources is also facing legal challenges in Britain. Zambian villagers last year won the right to sue the firm in London, though the company is appealing this ruling. “We cannot comment on Vedanta’s intentions behind their plans to delist from the London Stock Exchange, however, delisting from the LSE will not remove their liability for the alleged pollution that the claimants’ say was caused by Vedanta’s copper mining operations in Chingola,” said Oliver Holland, a solicitor at London-based Leigh Day which is representing the villagers.

“A company that is listed on the LSE and headquartered in the U.K. must adhere to strict regulations including rules on anti-bribery and modern slavery and of course can be sued in the English courts. Clearly if a company delists from the LSE and is no longer based in London, they will no longer have to adhere to the U.K.’s regulations and taking action against them in the English courts would be more difficult.”

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Printable version | Jan 20, 2021 1:53:24 AM |

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