InvestorQ : Why is Vedanta now looking at delisting the stock at much higher price than before?
ishika Banerjee made post

Why is Vedanta now looking at delisting the stock at much higher price than before?

1 year ago

When Vedanta had first made an attempt to delist its stock from the Indian bourses at around Rs.87.50 in the middle of last year, the idea had bombed forcing the company to cancel the offer at that point of time. Less than a year later, Vedanta is all set to repeat its delisting offer at a price that is nearly three times the originally price offered. The big question is whether the commodity major will really find buyers.

Vedanta may have failed in the earlier attempt at delisting at the price of Rs.87.50. At that time institutional investors like LIC had objected to the price as being too low. However, Vedanta Resources PLC is back to making another delisting attempt for the Indian unit. Only difference is that this time around the price offered is a relatively more attractive Rs.235 per share. Of course, the question remains if buyers will be interested.

As per the reports in the press, Vedanta Resources plans to buy 17.51% stakes in Vedanta Ltd at Rs.235 a share. Earlier, LIC which is the largest institutional shareholder had rejected the last offer and had suggested a delisting price of Rs.320 per share. The current offering of Rs.235 per share is substantially to closer to what LIC was seeking. Of course, many other factors would also come into play at this point of time.

At the peak of the commodity cycle, Vedanta was trading closer to Rs.300 so the current price offered is not too bad. Vedanta as a business model is now in a sweet spot with aluminium and zinc prices up nearly 30% since September. In addition, Chinese demand is a lot more robust and low inventory levels are boosting. However, the delisting will entail a cost of Rs.15,200 crore for Vedanta and push up the group debt further.