The Hindu Business Line : Vedanta buys 51% in Sesa Goa for Rs 4,070 cr

Acquisition process
To announce open offer in the next four days, which will remain open till July
The acquisition will be financed through a mix of newly committed bank debt facilities of $1.1 billion and the existing cash resources of the company

ACQUISITION MODE: (From left) Mr Msumi Lijima, Chief Executive Officer, Mitsui; Mr Anil Agarwal, Chairman, Vedanta Resources, and Mr S.D. Kulkarni, Chairman, Sesa Goa, at a press conference to announce acquisition of 51 per cent stake in Sesa Goa by Vedanta group. - Vivek Bendre

Mumbai April 24

Non-ferrous metals major Vedanta Resources appears to be preparing itself to get into steel making business to make itself a completely diversified metals and mining group.

The Anil Agarwal-founded Vedanta Resources, a London-listed company, flagged off its new pursuit on Tuesday by acquiring a controlling stake of 51 per cent in Sesa Goa Ltd.

Vedanta, which owns 72.3 per stake in Sterlite Industries, announced the acquisition of the 51 per cent stake in Sesa Goa owned by Japan's Mitsui for $981 million (around Rs 4,070 crore), implying a price of Rs 2,036 per share.

Open offer

The company will also make an open offer to the public shareholders of Sesa Goa to acquire an additional 20 per cent holding in the company at the same price.

It is expected to announce the open offer in the next four days, with the offer remaining open till July.

Vedanta has elbowed aside steel giant Arcelor Mittal and the Aditya Birla group in the race for Mitsui's controlling stake in Sesa Goa.

The company Chairman, Mr Anil Agarwal, said the total cash consideration for the 71 per cent stake (including the open offer) was $1.37 billion. The acquisition will be financed through a mix of newly committed bank debt facilities of $1.1 billion and the existing cash resources of the company, he told press persons here.

Steel making

Replying to a question, Mr Agarwal said the company would consider adding value to its newly acquired iron ore business by getting into steel making. He, however, said the company's possible foray into steel production would be through a joint venture with a steel maker.

Joint venture

Explaining the rationale for this, he said traditionally metal mining and production are two different businesses. "If you see the world over, mining companies entered into steel production only through joint ventures with a partner that had the know-how for steel making," he said.

The iron ore mining company, which was under Italian management before being acquired by Mitsui in 1996, produces about 10 million tonnes of iron ore from mines across Goa, Karnataka and Orissa. It exports about 90 per cent of its production to China, Europe and Japan.

At the current production rates, Sesa's iron ore reserves and resources of 207 million tonnes may support over 20 years of mined production.

The company also operates a 2.5 mtpa pig iron and metallurgical coke facilities.

Vedanta is in the process of expanding its existing businesses in the aluminium, copper and zinc segments to one million tonne production capacity each with an investment of $8 billion. said.

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Vedanta buys 51% in Sesa Goa for Rs 4,070 cr