Government may oppose Hindustan Zinc's acquisition proposal for Vedanta's global zinc business
1 min read . Updated: 27 Apr 2023, 12:51 PM IST
PremiumThe Indian government is expected to be against any proposal by Hindustan Zinc Ltd (HZL) to acquire its parent company Vedanta's global zinc business unless the valuation of the assets is reduced to a 'more realistic' level.
The Indian government may oppose Hindustan Zinc's proposal to acquire its parent company Vedanta's global zinc business unless the valuation of the assets is reduced to a "more realistic" level, said a media report. HZL had proposed a $2.98 billion cash deal on January 19 to buy the assets, but the government, which owns a 29.54% stake in HZL, must give its consent for the deal to pass.
The proposal expired when HZL did not seek shareholder approval within the mandated three months, following strong opposition from the government.
"Even though the government is willing to examine any non-cash deal option (presented by HZL), the main issue of high valuation still remains. We are not comfort- able with this sort of valuation," The Economic Times reported quoting a senior official.
In the case of a related-party transaction, minority shareholders need to approve the proposal by a majority. In this case, the proposal cannot pass without the government's consent given its 29.54% stake in HZL.
HZL chief executive Arun Misra, in recent media interviews, said the company hadn't yet formally shelved the plan to acquire Vedanta's international zinc assets. Vedanta holds 64.92% in the company that was privatised over two decades ago.
In its communication to HZL on February 17, the mines ministry had asked the company to "explore other cashless methods of acquisition of these assets".
"So far, HZL hasn't presented any non-cash deal option to the government for consideration," said the official quoted above. "For its part, the government hasn't, either in- formally or formally, suggested to HZL any non-cash options for acquisition of these assets."
Mint could not independently confirm the news developments.
The government had written to Sebi reinforcing its opposition and revealed its intention to take legal action if HZL went ahead with the proposed cash transaction.