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The Vedanta Delisting Offer is deemed to have failed as the total number of shares tendered by public shareholders is less than the minimum number of shares required to be bid in order for the delisting offer to be successful.
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Vedanta will have to return all the shares accepted in the offer in the next 2-3 business days as the delisting has failedFor the delisting to be successful, an eligible number of shares have to be tendered so that the promoter holding touches 90 per cent post-delisting. Based on this, the minimum number of Vedanta shares that had to be tendered by public shareholders was about 134.1 crore.
As on October 9, the last day for bidding, nearly 137.8 crore shares – more than the basic minimum requirement of 134.1 crore shares – were tendered. However, out of this, only 125.47 crore shares were confirmed bids and valid.
Thus, the delisting offer cannot see the light of the day and the company shall remain listed. The equity shares tendered by public shareholders will be returned by October 23, 2020.
High discovered price
The discovered price or offer price is the price at which the aggregate number of shares bid till that price, if delisted, will take the promoters’ shareholding in the company to at least 90 per cent (at 134.1 crore shares). As per the bid details available on BSE website, the number of tendered shares touch the 134.1 crore mark (assuming all shares tendered till then are confirmed) at ₹ 320 per share, more than 3.5 times the floor price of ₹87.25.
Thus, ₹320 per share would have been the likely discovered price at which promoters must delist the shares, had the delisting been successful.
No window for counter offer
If the promoters found the discovered price too high, they would have made a counter-offer to the public shareholders within two working days of the price discovered. Now there is no room for that.
As per the SEBI Delisting Regulations, the counter-offer cannot be less than the book value of the company. Vedanta, in their letter of offer, stated that the book value of the company as of March 2020 is ₹89.38 per share. However, as per the consolidated balance sheet of the company as of March 2020, the book value of the company could be ₹ 147 per share.
Market experts believed that the promoters of the company would have made a counter offer of ₹160-170 per share had the delisting attempt garnered the required numbers.
Again and again
If the minimum required number of shares – as explained earlier – would have been tendered by public shareholders in this counter offer, the delisting would have gone through at the counter-offer price made by the promoters.
If the counter-offer did not attract enough number of shareholders, promoters would have again reconsidered the counter offer price and the process would have continued.
And if the promoters and shareholders cannot reach an agreeable price to delist the shares, then the delisting would have been declared a failure.
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