Vedanta eyes buyout of Anglo American’s S. Africa business
MEGA PACT Acquistion likely to be done through a merger of Vedanta Resources and AASA through a shareswap deal
Investments Ltd, the family trust of Vedanta Resources Plc founder Anil Agarwal, is considering a plan to acquire control of Anglo American Plc’s South African business by merging Vedanta Resources with the South African unit through a share-swap, two people directly aware of the plan said.
Agarwal, through Volcan, already owns a 19.35% stake in parent Anglo American, the owner of the world’s largest diamond producer De Beers.
The merger of Vedanta Resources and Anglo American South Africa will create an entity valued at about $7 billion and eventually give Volcan Investments control of the merged entity, the people said, requesting anonymity.
Volcan Investments on Monday offered to purchase shares in Vedanta Resources that it does not already own and then delist the company from the London Stock Exchange.
“So, once Vedanta Resources merges with Anglo American SA as per the plan being thought about, Volcan will become a promoter shareholder in the merged entity. Volcan will first attempt to secure a board approval for taking over Anglo American SA, whose value is estimated at around $4 billion, but even if that does not happen Vedanta Resources will look to increase their stake to over 50% in Anglo American SA, which will increase Volcan’s economic interest in Anglo
MUMBAI:Volcan
American,” said one of the two people cited above.
Anglo American SA’s businesses include four firms -- Anglo American Platinum Ltd, Coal SA, De Beers Consolidated Mines (the iconic diamonds producer) and Kumba Iron Ore Ltd. The four units own assets worth around $12 billion in South Africa.
At present, both Agarwal’s Vedanta Group and Anglo American are valued at around $35 billion each.
Marcelo Esquivel, a spokesperson for Anglo American Plc declined to comment on the proposed takeover in response to an email. A spokesperson for Vedanta Group also declined to comment.
An email sent to Volcan Investments on Monday remained unanswered till Tuesday night.
“The idea is to first buy back the public shares of Vedanta Resources, which will save costs of being listed and make holding structure simpler. In fact, listing of only Vedanta Resources on LSE is no more required like the earlier regime (when it was easier for Vedanta to list in the UK rather than in India),” said the second person. “The second stage of the strategy is to take over Anglo American SA so that Volcan’s economic interest increases further in the company and is able to gain from Anglo’s growth. In the third stage, an option is to list the merged entity, which will ultimately benefit all stakeholders.”