Government against the Hindustan Zinc – Vedanta deal; stock hits 1-month low

20 Feb 2023 , 01:27 AM

Hindustan Zinc shares fell to a one-month low in Friday’s trading session after the government opposed the company’s planned $2.98 billion acquisition of zinc assets from Vedanta Ltd, citing valuation concerns.

The company previously stated that it intends to contact the mines ministry to resolve the disagreements. The government has raised several concerns, including asset valuation.

The sale of Vedanta’s zinc assets in South Africa and Namibia to Hindustan Zinc is critical to Vedanta Resources’ liquidity.

According to analysts, the deal is unfavourable to Hindustan Zinc’s minority shareholders in terms of valuation. The government owns nearly 30% of Hindustan Zinc, while Vedanta owns nearly 65%.

As per the letter, the government has restated their opposition to the ‘related party transaction.’ They have advised the company to consider alternative methods of acquiring these assets that do not involve cash.

The government has stated that it will oppose any further resolutions on the agreement and will pursue all legal options available to it.

At around 1.21 PM, Hindustan Zinc was trading 0.49% lower at Rs322.35, against the previous close of Rs323.95 on NSE. The counter hit an intraday high and low of Rs325.15 and Rs320.70 respectively.

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