Sterlite may increase Hindustan Zinc stake
Indian billionaire Anil Agarwal’s London-based resources group may raise its stake in Hindustan Zinc to strengthen control of the South Asian nation’s largest producer of the metal.
Agarwal’s Sterlite Industries (India) was in talks to buy the government’s 29 per cent holding, said Vedanta Resources spokesman Dhanpal Jhaveri. Sterlite, a subsidiary of Vedanta, owns 65 per cent and has an option to buy the stake.
Vedanta’s interest extends a record year for takeovers and investments in commodities companies, led by BHP Billiton’s proposed $128 billion takeover of Rio Tinto Group. Zinc is the world’s worst-performing metal this year, triggering a 25 per cent drop in Hindustan Zinc’s share price.
“The company may not have to pay a huge premium as zinc prices have fallen sharply in the recent months,’’ said Sanjay Makhija, vice-president at Mumbai-based Fortune Financial Services. Zinc prices have fallen 43 per cent this year on the London Metal Exchange.
Agarwal said, the company acquired Sesa Goa, the country’s largest non-state iron ore exporter in April, to help build a metal conglomerate such as Rio Tinto.
“We have indicated our intention to buy the stake but have yet to decide a date,’’ said Jhaveri. Sterlite may buy the Hindustan Zinc stake by December, earlier reported.
Udaipur-based Hindustan Zinc rose 6.6 per cent to Rs 737.15 at the 3:30 pm close on the Bombay Stock Exchange, the biggest gain in a month.
Sterlite is awaiting details from mediators on purchasing a stake in Bharat Aluminium, said Jhaveri. Last month, the government set up a panel to study a plan by Sterlite to buy the remaining stake. The panel comprises top bureaucrats.
Sterlite, 68 per cent owned by Vedanta, bought 51 per cent of the state-owned aluminum maker from the government in 2001. Bharat Aluminium shares are not publicly traded.
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