Anil Agarwal: Vedanta set to delist from Indian stock exchanges

On 12^th May’20, Vedanta Resources stated that mining and metal tycoon Anil Agarwal plans to offer INR 16,200 crore in cash to take the Indian stock exchanges-listed Vedanta Ltd private.

The London-based outfit Vedanta Resources which Anil Agarwal delisted in 2018, is offering INR 87.5 for a share of Vedanta Ltd to minority shareholders of the BSE/NSE-traded Company

The offer price is at a 2% discount to Vedanta Ltd’s on 12^th May’20 closing price of INR 89.30 on the BSE but represents a 10% premium to the stock’s last trading price on 11^th May’20. Vedanta Resources, along with other companies, holds 50.14% of Vedanta Ltd, while public shareholders own the remaining 49.86%. The Chairman of Vedanta Resources Ltd., Anil Agarwal, who started as a scrap dealer and now has a net worth of $3 billion according to Forbes, has been simplifying the corporate structure of his enterprise and the delisting of Vedanta Ltd is part of that effort.

Vedanta Resources said: “Taking the company private is the next logical step in the simplification process and will provide more operational and financial flexibility in a capital-intensive business.” In the past, Agarwal merged Sterlite with Sesa Goa to form Vedanta Ltd in 2012; four years later he folded Cairn India into Vedanta Ltd, and then in 2018 delisted Vedanta Resources’ shares from trading on the London Stock Exchange.

The delisting proposal of Vedanta Ltd comes amid the coronavirus pandemic that has depressed stock markets and clouded the demand for metals globally.

Vedanta Group Chairman, Anil Agarwal said: “Due to the impact of Covid-19 pandemic, we have accelerated the simplification strategy in this challenging environment to ensure support for meaningful deleveraging and to enable us to continue to invest in the growth of the business.

Agarwal added: “The delisting transaction will transform the credit profile of Vedanta Resources, which holds 36.8% in the India unit, and will support an accelerated debt reduction program in the medium term.”

The Company said: “The delisting offer will provide public shareholders of Vedanta Ltd an opportunity to realize immediate and certain value for their shares at a time of elevated market volatility.”

If Anil Agarwal would have planned to delist Vedanta Ltd in early January’20, then he might have to pay about INR 6,500 crore more than what he’s paying now as the stock has fallen 40% from its high.

Vedanta Ltd’s shares have fallen 42% since January’20, giving it a market capitalization of INR 33,195 crore. As per India’s delisting rules, if the promoter’s holding exceeds 75% in the company, then the stock can be taken off from trading on the bourses.