NEW DELHI: In a blow to Vedanta Group, the government has opposed Hindustan Zinc (HZL) proposal to acquire Mauritius-THL Zinc for $2.98 billion (an entity of Vedanta Group) over concerns of valuation.
The government, in a letter to HZL, in which it owns 29.54% stake, said it is ready to explore all legal avenues if this proposal is taken forward. THL Zinc Ltd is currently a wholly-owned subsidiary of THL Zinc Ventures Ltd, a direct wholly-owned subsidiary of Vedanta Limited.
“Government of India will oppose any proposed resolutions in furtherance of such agenda matter and will explore all legal avenues available to the Government of India in this regard. The company is requested to not take any further action in relation to such resolutions,” said the government in a letter to HZL.
Government holds 29.54% stake in Hindustan Zinc Ltd (HZL), while Vedanta owns nearly 65% stake. In the board meeting of HZL on January 19, 2023, the company agreed to acquire THL Zinc Ltd, Mauritius, for a cash consideration not exceeding $2,981 million.
The company in an exchange filing said this investment is an attractive opportunity for Hindustan Zinc to grow and increase its foothold overseas and take its brand globally. However, the government urged the Hindustan Zinc to explore cashless methods of acquisition of these assets.
“In the context of proposed resolutions, which envisage the acquisition of THL Zinc (a Vedanta Company) by HZL (also a Vedanta company) thus being a related party transaction, we would like to reiterate our dissent on the matter… We would urge the firm to explore other cashless methods of acquisition of these assets,” said the government in a letter.
Meanwhile, Hindustan Zinc, in an exchange filing it had not yet called for the meeting but its board would consider the government’s position. “Further, the notice calling the shareholders meeting has not been issued so far.”