Vedanta Delisting Offer Fails
A logo is displayed on the Indian headquarters of Vedanta Resources Plc, which houses the company’s Sterlite Industries (India) Ltd. unit, in Mumbai, India. (Photographer: Adeel Halim/Bloomberg News)

Vedanta Delisting Offer Fails

Vedanta Ltd.'s delisting offer is deemed to have failed as per terms of the delisting regulations, the company said in an exchange filing. A large number of unconfirmed bids and some technical glitches in the tender process are likely to have contributed to the failure.

The post offer public announcement by the company said that 125.47 crore shares were validly tendered by public shareholders. The reverse book building process for public shareholders to tender their shares, which began on October 5 had concluded on Friday.

For successful delisting of the shares, 134.12 crore shares needed to have been validly tendered for the promoter shareholding to cross the 90% shareholding threshold as per regulations.

"Accordingly, the acquirers will not acquire any equity shares tendered by the public shareholders in the delisting offer and the equity shares will continue to remain listed on the stock exchanges," the statement said.

The delisting offer was made by parent company Vedanta Resources Ltd. along with two other promoter entities.

The offer failure could put the Vedanta stock price under pressure, said Deven Choksey, managing director of financial services firm KRChoksey. “In the short-term the problem would be on the traders’ side who have acquired shares in the hope of an arbitrage play. They may want to come up for sale. That could put the price under pressure, that possibility can't be ruled out."

But, the share price may recover in the medium term, Choksey said, as the higher-than-market prices at which shares were tendered indicate the fair price of the stock. The fundamentals of the business have not changed, he pointed out. “The cash generating business of Cairn India Ltd. and Hindustan Zinc Ltd. distribute handsome dividend and that is where the argument is for recovery in the stock price along with the recovery in the metal cycle."

A large number of shares were bid at Rs 320 a piece, a substantial premium to Vedanta’s Friday closing price of around Rs 120.

Anil Agarwal of Vedanta Resources looks on during a panel discussion in Cape Town, South Africa. (Photographer: Waldo Swiegers/Bloomberg)
Anil Agarwal of Vedanta Resources looks on during a panel discussion in Cape Town, South Africa. (Photographer: Waldo Swiegers/Bloomberg)

Large Unconfirmed Bids

The delisting of the Anil Agarwal - led metal major saw a turn in fortune in the late evening hours of Oct. 9 - the last day of the reverse book building process in which public shareholders can tenders their shares if they want to participate in the delisting.

At about 3:30 p.m. on Oct. 9, the metals major looked set to receive more than the 134.12 crore shares it needed for the delisting to proceed. At that time, public shareholders had tendered 137.1 crore of the total 169.73 crore shares held by them, though some bids were pending confirmation from custodians.

The bidding was to have closed at the end of market hours, but due to glitches earlier in the day, on account of which some shareholders reportedly faced trouble in tendering shares, the Bombay Stock Exchange extended the bidding till 7 p.m.

By 7:35 p.m., the BSE website showed that only 125.47 crore shares were confirmed to be tendered and bids worth 12.31 crore shares were yet to be confirmed. The reasons for why they remained unconfirmed are not yet clear.

Bankers to the delisting offer had requested securities regulator SEBI for a one-day extension, on grounds that glitches in the exchange tendering webpage hurt participation, according to one official close to the process who didn't want to be named. But that extension was not granted.

As a result, the book as it stood at 7.30 pm on Oct. 9 has been considered as the final response to the delisting offer, and inadequate for the delisting to proceed.

Shareholders that tendered their shares in the reverse book building process will get them back within 10 working days, according to regulation.


SHARES NEEDED
No. of fully paid up equity shares (excl ADS): 356,10,08,835
90% of that: 320,49,07951
Promoters have: 186,36,18,788
They needed additional: 134,12,89163
Total shares with public: 169,73,90,047
Total public shares bid (confirmed): 125,47,16,610

Also read: Vedanta Delisting: Unconfirmed Bids, Glitches May Result In Vedanta Delisting Failure

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