London: Anil Agarwal, chairman of Vedanta Resources Plc, plans to buy as much as $2.4 billion of Anglo American Plc shares in the market after a merger proposal failed last year.
The purchase will be funded via a mandatory exchangeable bond issued by his holding company Volcan Investments Ltd and secured by Anglo American’s shares, the investor said in a statement on Wednesday. Agarwal, who founded Vedanta Resources, doesn’t intend to make a takeover offer for the company, it said. A representative for Anglo American declined to comment.
The full stake would equate to about 13% of Anglo’s stock, making Agarwal Anglo’s second-largest shareholder after South Africa’s Public Investment Corp., according to data compiled by Bloomberg. Anglo had rebuffed informal approaches from Agarwal last year when he contacted the London-based miner to discuss potential ideas including a combination with the Indian zinc miner he controls through Vedanta, people familiar with the plans said at the time. They were quickly dismissed by Anglo, they said.
“It gives him an extremely good seat at the table if there is going to be any corporate activity," said Jeremy Wrathall, head of mining research at Investec Plc. “We expect that M&A is going to be the next phase and maybe this is firing the starting gun."
Anglo was the best performing stock on London’s FTSE 100 Index last year, gaining about 288 percent as the company’s shares benefited from recovering commodities prices and a cost cutting program.
JPMorgan Chase & Co. is acting as the sole bookrunner and underwriter on the financing as well as the coupon guarantor. Volcan plans to place the bond on or around 11 April, the statement said.
The deal is a coup for JPMorgan, which rose three places to rank second in equity offerings in Europe, the Middle East and Africa last year, according to data compiled by Bloomberg.
The holding is similar to Liberty Global Plc’s 9.9% stake in ITV Plc and the Qatar Investment Authority’s holding in J Sainsbury Plc. Bloomberg