Vedanta to offer up to $4 bn for government stake in Hindustan Zinc, Balco

London-listed mining conglomerate Vedanta Resources has sweetened its offer price for additional stakes in Hindustan Zinc Ltd (HZL) and Bharat Aluminium Company (Balco) to nearly $4 billion (more than Rs24,800 crore).

The Anil Agarwal-led mining giant currently holds 64.9-per cent stake in Hindustan Zinc while the government has 29.5  per cent of the equity.

In Balco, Vedanta has 51 per cent in Balco and the government holds the remaining 49 per cent.

Vedanta proposes to buy out the government in Hindustan Zinc for $ 3.482 billion (more than Rs21,600 crore) and the 49 per cent in Balco for $ 487 million (more than Rs 3,000 crore).

Vedanta Resources will seek shareholders' nod for the revised proposal at its annual general meeting in London on 30 October.

Vedanta has been in talks with the government for more than two years to acquire the remaining stakes in Bharat Aluminium Company (Balco) and Hindustan Zinc.

The company had, in January 2012, offered to acquire government's stake in Hindustan Zinc and Balco for $2.938 billion and $338 million, respectively.

However, the government has not so far accepted the offer or offered to sell its stake to Vedanta or any third party.

Vedanta said the current offer price is based on the spot exchange for Indian rupee of 62.1383 against the US dollar (as of 13 October).

At this rate, the overall offer for Hindustan Zinc and Balco works out to more than Rs24,800 crore.

"If the entirety of the government of India's interests are acquired, the group's interests in Hindustan Zinc and Balco would increase to 94.4 per cent and 100 per cent, respectively, and Vedanta's economic interests in Hindustan Zinc and Balco would increase to 55 per cent and 58.3 per cent, respectively," the company said.

Vedanta, however, is not sure of the government accepting its offer or offering to sell its stake as part of the PSU divestment programme.

"Accordingly, there is no certainty that the group will acquire all or any part of the Government of India's interests in Hindustan Zinc and / or Balco.