Parent Launches Open Offer To Buy Up To 10% In Vedanta At 12% Discount

After a failed delisting and buying shares in bulk deals, billionaire Anil Agarwal's Vedanta Resources Plc has launched a voluntary open offer to acquire up to 10% stake in Vedanta Ltd.

The parent has offered to buy up to 37.17 crore shares from public shareholders of Vedanta at Rs 160 apiece, according to an exchange filing. If successful, that will cost Rs 5,948 crore. While the price has been determined in accordance with regulatory rules, it’s a 12% discount to the Friday’s close.

"This (the discount) is unfair given the intrinsic value of the company and the current commodity cycle,” Amit Dixit, assistant vice president-research at Edelweiss Securities, said. “The discount is disappointing and yet again proves that lessons have not been learnt from the delisting failure.”

The open offer comes after the parent acquired a little less than 5% in the company through the bulk deals in December to take its holding to 55.1%. These share purchases followed a failed delisting in October as it didn't get the minimum required shares at the offer price of Rs 87.5 apiece.

The reverse book building during the delisting process suggested that Rs 160 a share might have been acceptable then, Dixit said. “However, given the changed outlook of commodity cycle, we would wait and watch the reaction."

From November lows of Rs 92 per share, Vedanta’s stock has nearly doubled to more than Rs 180 apiece despite a 3.5% fall in late trade on Friday.

Moody’s Investors Service had called the failed delisting a credit negative while highlighting the heightened refinancing risk. A successful takeover of would have enhanced the parent's access to Vedanta’s cash flow, improving bond yields and refinancing options, it had said.