Chairman of Vedanta Resources, Anil Agarwal announced his plans to buy as much as $2.4 billion or 13 per cent of Anglo American Plc shares in the market after a failed merger proposal last year. The purchase will make Agarwal the second-largest shareholder after South Africa’s Public Investment Corp.
The purchase will take place through a mandatory exchangeable bond issued by Vedanta’s holding company, Volcan Investments, and secured by Anglo’s shares, a statement confirmed on Wednesday.
“It gives him an extremely good seat at the table if there is going to be any corporate activity,” said Jeremy Wrathall, head of mining research at Investec Plc. “We expect that M&A is going to be the next phase and maybe this is firing the starting gun.”
Anglo’s stock performed the best performing stock on London’s FTSE 100 Index last year driven by recovery in commodity prices and cost cutting measures.
Notably, Anglo American, founded by the storied Oppenheimer dynasty in South Africa a century ago, is one of the world’s top five mining groups, alongside BHP Billiton, Rio Tinto, Vale SA and Glencore.
“This is an attractive investment for our family trust,” Agarwal, who founded Vedanta Resources, said in the statement. “Anglo American is a great company with excellent assets and a strong board and management team who are executing a focused strategy to drive shareholder value. I am delighted to become a shareholder in Anglo American.”
JPMorgan Chase & Co is acting as the sole bookrunner and underwriter on the financing as well as the coupon guarantor. Volcan plans to place the bond on or around April 11, the statement said.
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Mr. Agarwal said his investment would not try to split Anglo American into South African and international arms as he believed the group's strength lay in both businesses.
He said that it was the strategy and the significant business prospect of the company that had attracted him to the company. The investment will give him a strong voice in the company’s strategy as the blue-chip British mining firm recovering from commodity price slump.
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