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Vedanta may sweeten offer for HZL, Balco stake

Vedanta has called shareholders meet on August 28 in London, alongside its annual general meeting, to seek nod for the sweetening of its offers for acquiring the remaining government stakes in the two firms.

twitter-logoPTI | August 22, 2012 | Updated 19:29 IST

Vedanta Group may shell out Rs 21,635 crore, up to 25 per cent more than planned earlier, for buying the government's remaining stakes in Hindustan Zinc and Balco as its previous offers have not been accepted so far.

Vedanta has called shareholders meet on August 28 in London, alongside its annual general meeting, to seek nod for the sweetening of its offers for acquiring the remaining government stakes in the two firms.

Vedanta spokesperson did not respond to the queries.

If it goes through, this deal alone could meet over 72 per cent of the government's disinvestment target of Rs 30,000 crore for this year.

Vedanta had acquired 51 per cent stake in Balco in 2001 and 64.9 per cent stake in Hindustan Zinc Ltd (HZL) during 2002-2003.

The group, in January, had offered Rs 15,493 crore for buying 29.5 per cent in HZL, and Rs 1,782 crore for 49 per cent residual holding in Balco.

After shareholders approval, the company Board would have the powers to raise the offer price up to Rs 18,606.10 crore ($3.378 billion) for HZL, and up to Rs 3,028.78 crore ($550 million) for Balco.

"As the Government of India (GoI) has not, to date, accepted the company's offers, approval from shareholders is being sought on the basis that the Company is authorised to negotiate the acquisition of the entirety of the GoI's interest in HZL for an aggregate consideration not more than 15 per cent higher than the price offered and in Balco for an aggregate consideration not exceeding $550 million," it said in a notice to company shareholders.

The 15 per cent increase in the previous offer of $2.938 billion (Rs 15,493 crore), for which shareholders' nod has been sought, amounts to $3.378 billion (about Rs 18,606 crore at the dollar-rupee exchange rate taken by Vedanta on August 7).

For Balco's remaining stake, the company has pegged the new price at $550 million (Rs 3,028.78 crore), an increase of 62.72 per cent from the offer of $338 million (about Rs 1,782 crore) made in January.

Taken together, it becomes 19.92 per cent increase in the offer price of January in US dollar terms. The offer gets sweetened by 25.24 per cent in Indian currency at Vedanta's conversion price of dollar-rupee of August 7 at Rs 55.0688 for a dollar.

According to the company, after making the offers for the two firms in January, it has written to the government twice in April and July. The offer has not been accepted yet.

It said the shareholders' approval would allow it "to complete the transactions in a timely manner".

The Anil Agarwal-led firm is being advised by J P Morgan Cazenove for the two transactions.

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