Vedanta Resources is set to delist from London, with the family trust of Chairman Anil Agarwal agreeing to buy the remaining 33.47 per cent stake in it for about $1 billion, valuing the the company at £2.325 billion ($3.03 billion).

While Vedanta sought to portray the development as a “natural progression”, the move will inevitably be linked to the events in Thoothukudi and calls from campaigners and Britain’s Labour party for the company to be delisted.

In a statement on Monday morning, the independent committee of Vedanta’s board — set up to evaluate the proposal — and Volcan, the holding company wholly owned by Agarwal’s discretionary trust, said they had agreed in principle on the key terms of a possible cash offer for the remaining share capital of Vedanta. The committee is set to recommend the offer to independent shareholders and, if accepted, the firm’s delisting could follow within 20 business days of that time.

The offer of £8.25 a share is a near 28 per cent premium on the closing price of Vedanta Resources on Friday. Investors would also receive the 41 cents per share dividend for the year ended March. Volcan currently owns 66.53 per cent of Vedanta’s total share capital. Shares of Vedanta were up 26 in early afternoon trading in London today. If the move is successful, Vedanta will make an application to delist its shares from the London Stock Exchange and from the Financial Conduct Authority’s list.

“The London listing has served us extremely well...however, given the subsequent growth of our underlying businesses and the maturity of 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,” Agarwal said in a statement.

The independent committee said it would recommend 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 and Cairn India Ltd into Vedanta Ltd.

Simplifying the structure

“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,” said the statement.

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

Mounting pressure

Pressure has built on Vedanta Resources in recent months in London, particularly following the killing of protesters in police firing in Thoothukudi in May. The opposition Labour party called for the company to be delisted from the LSE to “remove its cloak of respectability.”

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

Vedanta is also facing legal challenges in Britain. Zambian villagers last year won the right to sue Vedanta in London, though the company is appealing this ruling.

“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 UK 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 UK’s regulations and taking action against them in the English courts would be more difficult.”

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