Govt writes to market regulator opposing $2.9 bn Hindustan Zinc-Vedanta deal: Report
1 min read 02 Mar 2023, 06:05 PM ISTAccording to the official, the proposed deal between Hindustan Zinc and Vedanta has jeopardized the government's plans for divesting its stake in the former as investors have turned jittery leading to a drop in the HZL's share price.
PremiumHindustan Zinc's plan to buy two of Vedanta Group subsidiaries may get a setback as it is known that the Indian government has written to the market regulator underlining its opposition to the proposed deal.
Officials told Reuters that in a letter that was sent in February, the Ministry of Mines said, that the government was "kept in the dark" about the deal.
According to the official, the proposed deal between Hindustan Zinc and Vedanta has jeopardized the government's plans for divesting its stake in the former as investors have turned jittery leading to a drop in the HZL's share price.
Earlier, Mint reported that government officials said, HZL should explore alternative financial strategies other than handing out cash for the proposed $2.98 billion acquisition of Vedanta Ltd’s zinc assets. The official also revealed that the government may ask HZL to consider share swaps, rights issues, or warrants for purchasing these assets in Vedanta rather than using cash.
In January, Hindustan Zinc's board approved the acquisition of Vedanta Group's zinc businesses for a consideration in cash of $2.98 billion.
Currently, Vedanta Group is the largest shareholder in Hindustan Zinc holding 64.9%. In 2002, the Anil Agarwal-backed group bought a 26% stake in HZL from the government and later bought an additional stake of 20% through an open offer.
Both Vedanta and the government were in a dispute subsequently, which dangled the government's plan for selling its remaining stake in HZL.
However, last year, the dispute was put to an end and the government was planning to sell a part of its stake in HZL to meet its disinvestment target of ₹50,000 crore for the financial year FY23.
With Hindustan Zinc and Vedanta's deal, the official told Reuters that the government's plan to sell a part of its stake in HZL, for which an offer was set to launch in March, is now marred by uncertainty.
On BSE, HZL shares closed at ₹312.55 apiece marginally up from the previous closing. While Vedanta shares closed at ₹275 apiece down by 1.27%.
