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Vedanta buys Sesa Goa for $981 m

Staff Correspondent

Plans to venture into steel manufacture Plans to venture into steel manufacture


  • To make open offer by July
  • Plans thermal plant in Orissa

    — PHOTO: VIVEK BENDRE

    STRATEGIC MOVE: Msumi Lijima (left), Chief Executive Officer, Mitsui, Anil Agarwal (centre), Chairman, Vedanta Resources, and S. D. Kulkarni, Chairman, Sesa Goa, at a press conference in Mumbai on Tuesday.

    MUMBAI: The London-based Vedanta Resources has acquired a 51 per cent controlling stake in Sesa Goa from Mitsui & Co., Japan, for a consideration of $981 million, implying a price of Rs. 2,036 per share. To clinch the deal, Vedanta acquired 100 per cent of Finsider International Ltd., U.K., which owns the 51 per cent stake in Sesa Goa for Mitsui.

    Vedanta will now make an open offer to the public shareholders of Sesa to acquire an additional 20 per cent at Rs. 2,036 per share, which is a 16 per cent premium to the current market price. The company will make an announcement in this regard by the end of this week and the open offer is expected by July. The total cash consideration for the 71 per cent stake in Sesa Goa is $1.37 billion and the acquisition will be financed through a mix of newly committed bank debt facilities of $1.1 billion and existing cash resources.

    Vedanta is a metals and mining group and its principal operating companies comprise Hindustan Zinc for zinc and lead operations, Sterlite Industries India and Copper Mines of Tasmania Pty Ltd. (CMT) for its copper operations, Konkola Copper Mines for its fully integrated Zambian copper operations and Bharat Aluminium Company (Balco), Madras Aluminium Company (Malco) and Vedanta Alumina Ltd. (VAL) for its aluminium and alumina operations. Sterlite Energy for its commercial power generation business plans to set up a 4X600 MW coal-based thermal power plant at Jharsuguda, Orissa, at a cost of $2 billion.

    Having acquired the largest iron ore company in the country, Vedanta also plans to venture into steel manufacture. Addressing the media, Anil Agarwal, Chairman, Vedanta Resources plc., said, "It is the next logical step. It is too early to contemplate on the size of the steel plant but generally downstream steel plants are in the region of 5 million to 10 million tonnes per annum (tpa). We may go in for a joint venture to set up the plant in order to have access to technology because mining business and steel manufacturing are different businesses. ''

    Mr. Agarwal said Vedanta would make total investments of $13-14 billion across the metals industries in the next three to five years, including expansions and acquisitions. Sesa was previously under Italian management before being acquired by Mitsui in 1996.

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