Why is Vedanta Delisting?

Vedanta Delisting from the Indian stock exchanges was announced on May 11, 2020. The Vedanta group has been pursuing a process of corporate simplification for several years. The merger of Sterlite with Sesa to form Sesa-Sterlite in 2012 and the merger of Cairn India with Vedanta in 2016 was a part of this process. Now the next step is to take the company private.

This is not the first time Vedanta is doing this.

• Companies are taken private when the promotors have confidence that they can restructure the business and can make the company more valuable and relist again at a higher valuation. Vedanta shares have already been beaten down by 50% from its 52 week high. So this is the best time for the company to delist.
• Previously, in 2018, Anil Agarwal had declared plans to delist Vedanta Resources from the London Stock Exchange. He completed the buyout successfully in October that year. Vedanta was the first Indian company to list in London in 2003 in a $644 million offer.
• Vedanta Resources along with the other members of the promoter group holds 51.06% of the shares, excluding the American Depository Shares (ADS) issued by the company. The rest they will have to buy it back from the public.
• At the offer price of Rs 87.5, Vedanta Resources will have to shell out Rs 16,218 crore to acquire all of the public shareholdings. This will most probably be done through their Volcan Investments Arm.

Vedanta Delisting: What does it mean for retail Investor?

You can read here: Vedanta Delisting- Billion Dollar Valuation

A Few Things to Note

• A voluntary delisting does not happen overnight. Investors get ample time to offload their stocks. After the formal approvals came, the shares will delist. Thereafter, an exit window of one year will be made available to the remaining shareholders to tender their shares at the delisting price.
• There is still time for the final approval, during which the shares would be actively traded and can expect volatile movements. Investors can still find a suitable exit in the secondary market if the price is more than the delisting offer price.