Vedanta's Delisting Plan Unsuccessful, Company to Return All the Equity Shares Tendered

Vedanta, the mining major has stated that in a regulatory filing on October 10, its delisting offer is deemed to have failed. The company attributed it to a large number of unconfirmed orders. Which as a result is forcing the company to look for options to extend the buyback period by a day.

Vedanta shares were down 9.99 percent at Rs. 109.90 on the BSE, while benchmark Sensex was up 324.14 percent at 40,879 points. “The total number of Offer Shares validly tendered by the Public Shareholders in the Delisting Offer is 125.47 crore Offer Shares, which is less than the minimum number of Offer Shares required to be accepted by the Acquirers in order for the Delisting Offer to be successful in terms of Regulation 17(1)(a) of the Delisting Regulations. Thus, the Delisting Offer is deemed to have failed in terms of Regulation 19(1) of the Delisting Regulations,” Vedanta said in the exchange release. Vedanta needed 134 crore shares tendered by public shareholders for delisting to go through.

“In connection with the aforesaid delisting offer, we have been informed by Vedanta Resources Limited and its indirect subsidiaries namely, Vedanta Holdings Mauritius Limited and Vedanta Holdings Mauritius II Limited, (collectively to be referred as ‘Acquirers’) that the Delisting Offer is deemed to have failed in terms of Regulation 19(1) of the Delisting Regulations,” Vedanta said in the exchange filing.

Equity shares of the company and those tendered by the shareholders in the delisting offer will continue to remain listed on the exchanges for now. The reverse book building process for public shareholders to tender their

As the delisting efforts of the company became unsuccessful, the equity shares tendered by the public shareholders will be returned by October 23, 2020

shares began on October 5 and concluded on October 9. The floor price for share tendering was set at Rs. 87.25. As per regulations, for successful delisting of shares, promoter shareholding must cross the 90 percent shareholding threshold. The 12 crore unconfirmed bids have stumped market analysts and the quantity was significant enough to create a distorted market for bids and had a material impact on the stock price movement. The Securities and Exchange Board of India (SEBI) is likely to ask BSE to verify the source of these unconfirmed bids and whether the bids were genuine or if there was a foul play as alleged by some shareholders.

As the delisting efforts of the company became unsuccessful, the equity shares tendered by the public shareholders will be returned by October 23, 2020. LIC, which held 6.37 percent in Vedanta, tendered all its shares at Rs. 320, a 267 percent premium over the floor price of Rs. 87.25, which upset Vedanta’s calculations. Now, LIC’s bid price is the discovered price for the reverse book building process. SEBI delisting rules suggest that counteroffer price cannot be less than the book value of the company. As per the consolidated balance sheet of the company as on March 2020, the book value of Vedanta could be Rs. 147 per share. If the delisting had garnered the required number then promoters could have made a counteroffer at more than Rs. 150 per share. In the counteroffer, if the minimum required number of shares would have been tendered by the public shareholders then the delisting would have gone through at the counter-offer price made by the promoters. The process would have continued if the counter-offer did not attract enough number of shareholders. In the past two years, Vedanta is the third company to make an unsuccessful delisting effort after INEOS Styrolution and Linde India.