Hindustan Zinc’s All-Cash Bid for Vedanta’s Assets Lapses – Sources

Hindustan Zinc Ltd.’s plan to acquire specific zinc assets from Vedanta Group for $2.98 billion in cash fell through because the Indian miner failed to obtain shareholders’ approval in time, according to two government sources.

According to Indian regulations for listed businesses, Hindustan Zinc had three months starting from the announcement of the merger to summon an extraordinary general meeting to request approval from its minority shareholders.

“The issue is dead because three months have lapsed,” said the first government official. Hindustan Zinc had planned to use its cash reserves to finance the acquisition, but in March it announced a final dividend of 110 billion rupees ($1.34 billion), the person said. As of December 31, it had 164.82 billion rupees in cash and cash equivalents as well as its combined total investments. Because they are not authorized to speak to the media, the sources requested anonymity.

With a 29.54% stake in Hindustan Zinc, the Indian government holds the largest minority holding, while Vedanta holds a 64.9% stake. The purchase of two Vedanta Group companies by Hindustan Zinc was challenged by the government, which cited the agreement as a “related party transaction” and reiterated its opposition to it being financed with cash reserves.

Since the deal was announced, Hindustan Zinc’s share price has plummeted, putting the government’s plan to sell a portion of its stake in jeopardy. Since then, it has suspended that plan. Vedanta Resources suffered a setback when the agreement collapsed because the mining company, founded by billionaire Anil Agarwal, had hoped to use the transaction to reduce some of its $7.7 billion in net debt. Reuters emails requesting comment from Hindustan Zinc, Vedanta, and the federal mining and finance ministries received no immediate response.

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