Shares of Anil Agarwal-owned mining conglomerate Vedanta Ltd. fell over 2% on Monday, September 8, after sources told CNBC-TV18 that it has outbid the Adani Group with a ₹17,000 crore offer for Jaiprakash Associates, in an open challenge round.Jaiprakash Associates, currently under the Insolvency and Bankruptcy (IBC) process, is currently facing claims worth ₹59,000 crore from various creditors, led by the National Asset Reconstruction Company Ltd. (NARCL).Sources further said that the other suitors in the fray, Dalmia Bharat Group, Jindal Power, and PNC Infratech did not submit any bids in the final round.
Reserve price for the open challenge round was set at ₹12,000 crore and lenders have sought assurances from suitors that an additional sum would be paid in case the Yamuna Expressway Industrial Development Authority land dispute is resolved in the company’s favour.According to brokerage firm Nuvama, the event is a negative development for minority shareholders and that it is unconvinced by the group’s rationale to acquire the asset.
Vedanta is getting into an unrelated business when the group’s priority should be deleveraging, according to Nuvama, who also stated that the asset will be housed under Vedanta Ltd. itself as part of the demerged entity, where funding the entire ₹17,000 crore amount will be difficult.”Culmination of the transaction is likely to restrict any re-rating for the stock,” the Nuvama note said.Vedanta recently paid ₹16 per share as the second interim dividend to its shareholders for the current financial year.Based on the June quarter shareholding, Vedanta had over 20 lakh minority small retail shareholders, or those with an authorised share capital of up to ₹2 lakh, who have a 11.64% stake. Promoters of the company have a 56.38% stake.Citi has maintained its “buy” recommendation on Vedanta with a price target of ₹500, saying that currently, there are multiple uncertainties that surround the stock, and that these uncertainties, could create an overhang on the stock.Shares of Vedanta are trading 2% lower in early trading on Monday at ₹437.2. The stock has remained flat so far on a year-to-date basis.(Vedanta emerging as the highest bidder for JP Associates newsbreak is from Ritu Singh.)
