Vedanta Lifts Hindustan Zinc, Balco Bid, Offers $3.93 Billion

Vedanta Resources Plc. (VED), controlled by billionaire Anil Agarwal, will raise its offer to increase its stakes in Hindustan Zinc Ltd. (HZ) and Bharat Aluminium Co., seeking control of bauxite mines and India’s biggest zinc maker.

The company will ask for shareholder approval on Aug. 28 to offer as much as 15 percent more for Hindustan Zinc, it said in a note to investors. The offer price for Bharat Aluminium will be raised as much as 63 percent to $550 million.

The London-listed mines and metals company had offered a combined $3.28 billion for the government’s 29.5 percent stake in Hindustan Zinc and 49 percent in Bharat Aluminium. Vedanta holds 65 percent in Hindustan Zinc and 51 percent in Bharat Aluminium through its Indian subsidiary and copper maker Sterlite Industries India Ltd. (STLT)

Higher ownership in these companies will give Vedanta greater autonomy in the operations and control of almost $3.3 billion cash reserve at Hindustan Zinc as on June 30. The transactions will help the Indian government raise funds to pay for subsidies on food, fuel and fertilizer and invest in social projects, including education and health.

“The offer has not officially been communicated to us,” mines secretary Vishwapati Trivedi said by telephone today. “We’ll see when it comes.”

The mines ministry sent Vedanta’s earlier proposal for the cabinet’s approval, Trivedi said yesterday.

Hindustan Zinc shares rose as much as 5 percent to 136.85 rupees, the highest level in almost six months. The shares have risen 12 percent this year, trailing a 16 percent increase in the benchmark Sensex. At the current market price of 133.40 rupees, the government’s stake in the company is worth $3 billion.

Should Vedanta manage to acquire all of the government’s 29.5 percent stake, it will have to sell 19.4 percent of its shareholding to the public to meet a regulatory requirement of at least 25 percent of public float in listed companies, the company said in the shareholder note.

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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