The Vedanta Resources announcement on Monday that it would delist from the London Stock Exchange (LSE) comes at a time when its Chairman Anil Agarwal is taking a back seat in the daily functioning of the group himself.
Volcan holds nearly 67 percent of Vedanta, and said on Monday it had reached an agreement in principle on a possible offer for the rest, although there was no certainty that a firm offer would be made.
The proposed offer does not affect Indian unit Vedanta Ltd, in which Vedanta Resources is the largest shareholder.
While the offer is a 28 per cent premium to Friday's closing price, Vedanta's shares were trading above 850p before the drop in May.
Through Volcan, Agarwal bought a near 20 percent stake Anglo American to become the biggest shareholder, but has played down speculation that he seeks a tie-up with the company. After delisting of Vedanta Resources, Agarwal would have just two listed companies in India - Vedanta Ltd which houses his sprawling copper, silver, lead, iron ore, power, aluminum mining and oil and gas, and Hindustan Zinc Ltd.
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The company is also facing legal challenges in Britain.
Indian industrialist Agarwal said last year he does not intend to keep Vedanta in family hands and would withdraw from the group in the next few years. Also, the offer of cash provides an immediate and certain premium. "Volcan believes that now is the right time to take another important step in simplifying the structure of the Vedanta Group by removing a duplicate stock exchange listing, which it believes to be in the best interests of all stakeholders". The move would also help simplify Vedanta's structure, in the wake of other such moves, including the merger of various Indian subsidiaries into Vedanta Limited and the merger of Cairn India Limited into Vedanta Limited. "Volcan believes that the original rationale for Vedanta is now less compelling, given the increased maturity of the Indian capital markets, together with Vedanta Limited's significant growth", it said. "But if you look at the huge debt pile of Vedanta Plc, the arm listed in London, then it makes sense to delist", a banking source said. "We can not comment on Vedanta's intentions behind their plans to de-list from the London Stock Exchange, however, de-listing from the LSE will not remove their liability for the alleged pollution that the Claimants' say was caused by Vedanta's copper mining operations in Chingola", said Oliver Holland, a solicitor at London-based Leigh Day which is representing the villagers.
Commenting on the possible offer, Deepak Parekh, Senior Independent Director of Vedanta, said: "Since being approached, the independent directors of Vedanta Resources Plc have evaluated the possible offer and have negotiated its terms".
Independent shareholders are expected to approve an offer as the shares have significantly underperformed, Jefferies analysts said.