Vedanta open offer begins on March 23 at revised ₹235/share

Suresh P Iyengar Mumbai | Updated on March 17, 2021

LIC decision is key; experts say firm commodity price may spoil this attempt, too

Billionaire Anil Agarwal’s yet another attempt to delist Vedanta through a buyback offer may not cut ice with investors given the uptrend in the commodity market.

Vedanta Resource, the promoter group company, has offered to buyback 17 per cent of the floating shares at ₹235 per share, which is 47 per cent higher than the ₹160 offered in January. The offer opens on March 23 and closes on April 7. The company will spend ₹15,300 crore if the offer is fully subscribed.

Shriram Subramanian, MD of InGovern Research Services, a leading corporate governance firm, said though the offer price has been increased from last time, there is no compelling reason for investors to tender their share in the buyback offer of Vedanta, as commodities have been on a super cycle, which is expected to sustain given the economic revival across the globe post-Covid impact.

“Even if investors want an exit, they can offload their shares in the open market. Fundamentally, I do not think the open offer will push up share price in the stock market as the quantum of share the promoter is buying back is much less compared with the floating stock,” he added.

Failed attempt

Last October, the promoters of Vedanta made a failed attempt to delist the company through a reverse book-building offer at ₹87.5 per share when the share price was at ₹120. Most investors tendered their shares at ₹320 a piece in that offer.

The promoter entity had acquired 4.98 per cent stake in the company for ₹2,959 crore from institutional shareholders through a bulk deal, and enhanced its holding to 55 per cent from 50 per cent. Promoters are allowed to acquire up to 5 per cent a year through creeping acquisition without triggering an open offer.

Early this year, the promoters made a voluntary open offer to acquire 10 per cent of Vedanta at ₹160 when the share price in the open market was at ₹182. This offer price has been increased to ₹235 and the buyback size has been increased to 17 per cent.

Gaurav Garg, Head of Research, CapitalVia Global Research, said that at the current offer price, investors may not be interested, as the largest shareholder LIC had submitted all its shares at ₹320 a piece in last October.

Retail investors should not be much concerned about the promoters’ attempt to delist the company as at the time of raising stake in December, they have clarified that the move is only to simplify their holding structure, he added.

Published on March 17, 2021

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