According to a senior government source quoted by The Economic Times, the government is likely to veto a proposal by Hindustan Zinc to acquire Vedanta's worldwide zinc holdings unless the assets' worth is reduced to “more reasonable levels.”
The government has objected to Hindustan Zinc's offer to pay $2.98 billion in cash for Vedanta's worldwide zinc holdings.
Due to valuation issues, the government rejected Vedanta Ltd.'s bid to sell Hindustan Zinc Ltd. its worldwide zinc business for $2.98 billion in February.
In order to block the sale of the assets situated in Africa to HZL, in which it has a 29.54 percent share, the government had vowed to file a lawsuit.
The Ministry of Mines said that the sale is a “related party transaction” and that the government would “like to reiterate” its opposition in a letter to HZL that was uploaded by the business to stock markets.
In January, HZL and THL Zinc Ltd. Mauritius' parent company, Vedanta Ltd., agreed to a $2.98 billion, 18-month, phased acquisition deal.
Currently, Vedanta Limited controls 64.92 percent of Hindustan Zinc, while the Indian government has a 29.54 percent interest. It was privatised twenty years ago.
The government had earlier threatened Vedanta with legal action if the purchase moved through and had even written Sebi to reaffirm its stance.
“The main issue of high valuation still exists, even though the government is willing to look into any non-cash deal option (presented by HZL).” We don't feel comfortable with this kind of value, a top official familiar with the facts was cited as saying by The Economic Times.