(Reuters) - Chairman Anil Agarwal’s family trust plans to offer around $1 billion in cash to take London-listed Vedanta Resources Plc (VED.L) private, the Indian company said, as it grapples with the aftermath of deadly protests at home.
An independent committee that evaluated the proposal has indicated it supports the offer from the Volcan Investments trust, which represents a 27.6 percent premium to Vedanta’s last close, and would recommend it to shareholders.
Volcan holds almost 67 percent of Vedanta, and said on Monday it had reached an agreement in principle on a possible offer for the rest, although there was no certainty that a firm offer would be made.
Independent shareholders are expected to approve an offer as the shares have significantly underperformed, Jefferies analysts said.
Vedanta shares were trading at 819 pence at 0800 GMT, up 27 percent and close to Volcan Investments’ offer of 825 pence per share, which values the company at 2.32 billion pounds ($3.05 billion).
Shareholders will also be entitled to a previously announced dividend of 41 cents per Vedanta share, the company said, adding that this would boost the offer price to 856 pence per share.
Indian industrialist Agarwal, who started out as a scrap dealer, said last year here that he did not intend to keep Vedanta in family hands and would withdraw from the group in the next few years.
But the company has come under scrutiny since May following demonstrations where police killed 13 protesters at a copper smelter in India.
Volcan said it would aim to delist Vedanta from the London Stock Exchange a minimum of 20 days from the date it receives acceptances for a firm offer or had acquired or agreed to acquire shares from independent shareholders.
Vedanta was the first Indian company to list in London, in 2003.
The proposed offer does not affect Indian unit Vedanta Ltd (VDAN.NS), in which Vedanta Resources is the largest shareholder.
Liberum analysts wrote in a note: “It’s curious action given that Agarwal’s plans have always been widely ambitious... and this will limit his access to London’s capital markets.”
Yet Agarwal said in the statement that a separate London listing was no longer necessary to achieve the company’s strategic objectives given the growth of the business and the maturity of India’s capital markets.
Agarwal bought a copper company in 1979 and now has businesses spread across the world, including India, Africa, Ireland and Australia.
Through Volcan, Agarwal bought a near 20 percent stake Anglo American (AAL.L) to become the biggest shareholder, but has played down speculation that he seeks a tie-up with the company.
“It is interesting that if they wanted to merge with Anglo American, having a UK listing would help. But if you look at the huge debt pile of Vedanta Plc, the arm listed in London, then it makes sense to delist,” a banking source said.
Under UK takeover rules, Volcan has until July 30 to make a firm offer or walk away from the deal.
($1 = 0.7604 pounds)
Reporting by Arathy S Nair in Bengaluru and Clara Denina in London; editing by Jason Neely