Vedanta's revised offer better deal for minority shareholders: Edelweiss

Topics Vedanta  | Edelweiss | M&A

Vedanta Resources

Vedanta Resources' revised open offer price of Rs 235 per share for its Indian unit is a better deal for investors than the earlier offer price, brokerage firm Edelweiss said on Wednesday.

Vedanta Resources and persons acting in concert with it (promoter group) on Tuesday increased the offer size and price for the voluntary open offer for Vedanta Ltd to Rs 235 per share for 65.1 crore shares (17.5 per cent of total equity share base) from the previous Rs 160 for 37.17 crore shares (10 per cent).

"The revised offer represents a 4 per cent premium to the current market price (CMP), a better deal for investors than the earlier offer price that implied a discount of 13 per cent to the CMP then, Edelweiss said.

However, the fragmented nature of shareholding may affect tendering of shares, it said.

The total consideration assuming the full tendering of shares in the open offer would be Rs 15,300 crore.

"We understand that promoter group has tied up an additional debt facility of USD 1.2 billion, 8.95 per cent due 2025. The proceeds might be partially utilised for funding the acquisition of shares in the open offer," the brokerage said.

Hence, total debt at Vedanta Resources (standalone) would increase to USD 8.2 billion.

"While the increased shareholding in Vedanta would fetch them an additional cash distributed through dividend, we believe that debt servicing concerns still persist," it said.

Over the medium term, it is expected that the leverage at the parent's end would rise while higher shareholding would result in a higher share of dividend from Vedanta.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel