InvestorQ : Can you tell me about the open offer made for Vedanta Ltd? Is it another attempt to delist the stock?
Neelam Naik made post

Can you tell me about the open offer made for Vedanta Ltd? Is it another attempt to delist the stock?

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Anu Biswas answered.
2 weeks ago
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It may be recollected that a couple of months when Vedanta Resources of the UK had made a bid to delist Vedanta Ltd from the Indian stock exchanges at a price of Rs.87 per share, it had failed because the largest minority shareholder, LIC, had refused to play ball. The delisting was shelved but Agarwal has not given up on his idea of picking a bigger chunk.

It is now quite clear that the promoter group wants to gradually chip away at the stock via the open market. Of course, they are now doing it at a much higher price than what they had offered earlier because the stock price itself has doubled in the interim period. Vedanta had recently acquired a small stake in Vedanta from the open market.

The small acquisition was below 5% through an open offer to keep within the limits of the creeping acquisition limit. At that point, Vedanta Resources had raised its stake in the Indian subsidiary from 50.14% to 55.04%. Now, Vedanta Resources has announced plans for an open offer to buy up to another 10% of the equity of Vedanta Ltd.

In the latest round, Vedanta Resources has made an open offer to buy a total of 37.20 crore shares of Vedanta Ltd at a price of Rs.160 per share. However, this offer still represents an effective 12% discount to the closing price of Vedanta Ltd on Friday the 08th of January. The open offer will be managed by the Indian unit of J.P. Morgan Chase.

It will be a voluntary open offer with no commitments on the minimum level of acceptance by Vedanta, so in a way the UK parent has an upper hand. If the entire 10% open offer gets accepted, it will cost Vedanta Rs.5,948 crore. It needs to be seen what is the long term game plan of the parent on this front.

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