The decision of Vedanta’s promoters to take the firm private by buying out shareholders at ₹87.50 a share is “opportunistic and the price does not reflect the fundamental value of the equity,” Institutional Investor Advisory Services said on Friday. The promoters will have to offer a significantly higher exit price if the bid is to succeed, it added. Last week, billionaire Anil Agarwal-run Vedanta Resources, the London-based holding company, said it will buy back Vedanta shareholders at ₹87.50 a share and take the company private. The offer price was at 9% premium over the previous day’s closing price, but since then, the stock has rallied and closed at ₹92.90 on the BSE on Friday. “The free float market capitalisation of Vedanta is about $2.2 billion and we expect the parent to shell out significantly more, if the de-listing is to go through,” the shareholders’ advisory wrote in a note. Attributing the move to go private to promoters’ debt repayment pressures, the advisory said, “Vedanta delisting at a floor price of ₹87.50 is opportunistic. “The stock is currently trading close to its 52-week low, which is a steep discount to its historic five-year average as a natural fallout of the current economic environment and the COVID-19 crisis.” “The current market price does not reflect the fundamental value of the equity,” the advisory said.
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