Vedanta`s Open Offer
| Case Code: FINC185 Case Length: 9 Pages Period: 2020-2021 Pub Date: 2021 Teaching Note: Available |
Price: Rs.200 Organization: Vedanta Resources Limited Industry: Metals & Mining Countries: India Themes: Open Offer, Investment banking |
Abstract Case Intro 1 Excerpts
Abstract
This case examines Vedanta Resources Limited’s (VRL) desperate attempt to acquire its Indian subsidiary Vedanta Limited (VL). VRL first went in for delisting of VL in October 2020. But, after that proved unsuccessful, it went in for a voluntary open offer in January 2020. However, investors tendered only 57.49% of the 651 million shares which VRL intended to buy through the open offer. Although the open offer was not successful, it did help VRL to increase its stake in VL. But VRL was still a long way from having the 90% stake which was mandatory under the law for it to delist VL. This is a unique case where the parent company was desperately looking to acquire its cash-rich operating subsidiary but was unable to do so as it was offering a price lower than the shareholders of VL expected. It remained to be seen what steps VRL would take in the future to acquire and delist its profitable subsidiary.
Issues
The case is structured to achieve the following teaching objectives:
- To understand open offers and takeovers.
- To understand various types of open offers and takeovers.
- To examine why a company opts to go in for an open offer and how this affects various stakeholders of the company.
- To understand various regulations related to an open offer.
Contents
Keywords
Open offer; Takeover; Voting rights; Creeping Acquisition; Voluntary Open Offer; Draft Letter of Offer; Delisting; Tepid Response from Shareholders; Takeover Codes; SEBI; Vedanta
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