Vedanta promoters announced an open offer for acquisition of up to 371.75 million equity shares, representing 10 per cent of fully diluted voting share capital of Vedanta, from the public shareholders by Vedanta Resources together with Twin Star Holdings, Vedanta Holdings Mauritius and Vedanta Holdings Mauritius II (the promoter group & person acting in concern).
Vedanta Resourses would come out with a detailed public statement and letter of offer within 15th January, 2021 containing details of offer.
The offer price at Rs 160 per share is at a 12 per cent discount to current market price. As the offer is below the market price, it is likely to have a negative impact on the stock, ICICI Securities said in a note.
Earlier in December 2020, the promoter group bought 4.98 per cent equity from the market at Rs 160/share by paying $400 million.
In the past one month, Vedanta has outperformed the market by surging 20 per cent, against 6.5 per cent rise in the S&P BSE Sensex.
Motilal Oswal Securities sees Vedanta’s open offer to buy 10 per cent stake as a step towards another attempt at delisting. If the open offer goes through, promoter shareholding in the company would rise to 65 per cent.
Capital Allocation would be a key factor to watch. Extension of loans of $956 million in April-September 2020 (H1FY21) by Vedanta to promoter group highlights the stretched balance sheet of the promoter. The company’s cost reduction in aluminum, higher volumes in zinc and oil and gas businesses, as well as higher commodity prices should drive earnings, the brokerage firm said in stock update. However, an open offer at around 12 per cent discount could adversely impact the stock price. It maintains ‘Neutral’ rating on the stock.