Vedanta Update: Promoters launch an open offer for 10% additional stake!

• Vedanta Resources Plc, the promoter entity of Vedanta has launched an open offer to acquire a 10% stake in its Indian arm at Rs 160 per share, approximately at a 12% discount to the current market price.
• If the offer is successful, the promoter’s stake will increase to 65.11%
• Last month, the promoters increased their stake by purchasing an additional 5% stock through the open market. We had covered the same in our previous report (Read here). 
• Vedanta Resources said that “this is in line with our stated strategic priority for simplifying the group structure to align the group's capital and operational structures, streamline the process of servicing the groups’ financial obligations”.
• Vedanta has said that it would come out with a detailed public statement and letter of offer by January 15, 2021. 

INDmoney View

• In October this year, the promoters had tried to delist the company at a floor price of ₹84. However, the offer failed to garner interest as many analysts and institutions had said that the shares are undervalued at the set price and are much below the book value of the company. 
• Previously we had said that the promoters will look to increase their stake through multiple ways. The open market purchase of 5% last month and this open offer are steps forward to have another shot at delisting the company.
• Fundamentally the company has also remained weak, despite a positive view on commodities due to high inflation expectations, there is a lot of uncertainty surrounding the stock.