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Just when everyone wrote him off for his bid for bankrupt mining company Asarco, Vedanta Resources Chairman Anil Agarwal is back with a vengeance.
Sterlite Industries, the Vedanta group's flagship, has raised its offer price by a fifth to $2.56 billion to acquire the US copper miner in an all-cash deal -- its third bid in two years.
The company on Friday said the modified takeover plan had been submitted to the district court in Texas, which was reviewing a recent bankruptcy court order that went in favour of rival bidder Grupo Mexico.
Sterlite, which has been locked in a bidding war for more than a year with Grupo, has topped its rival's offer by almost 3 per cent. Sterlite's earlier offer was $2.13 billion, part cash and part share-swap offer: this was topped by a $2.5 billion Grupo Mexico offer last month.
Sterlite's new offer followed a bankruptcy court recommendation last week that Asarco's assets should go back to its estranged parent Grupo. The recommendation from bankruptcy Judge Richard Schmidt backing Grupo's offer requires final approval from US district judge Andrew Hanen, who is expected to issue a final ruling in October.
Sterlite pointed out that the price revision, after extensive discussions and review, would provide full cash payment to asbestos creditors and allowed late filed claims and subordinated claims. With this change, the Indian metal major will own 100 per cent of the creditors' interest in SCC litigation trust, the company said in a statement.
Asarco revealed the new Sterlite offer in a court filing in which the company objected to Judge Schmidt's findings and urged approval of the Sterlite deal as the best one for the company and creditors, who were owed $3.62 billion.
The Mumbai market reacted negatively to Sterlite's decision to raise the offer price, with the share price falling 4.8 per cent to Rs 730.10 in intraday trade. It partly recovered to close at Rs 745.90, down 2.71 per cent. Sterlite's American Depository Receipts (ADRs), however, rose 1.9 per cent to $15.70 at close of trade yesterday in New York.
Both bidders want to buy Asarco to gain control of its copper mines in Arizona. Prices of the metal doubled this year on rising Chinese demand and optimism that the US economy will recover from a slowdown. Copper for three-month delivery rose 1.5 per cent to $6,390 and traded at $6,370.25 a tonne at 6 a m in London.
Vedanta plans to invest about $20 billion to increase its metal and power production and buy Asarco, for which it first bid in May 2008.
The company has about $6 billion in cash and cash equivalents on its books and is looking to raise debt for its various projects.
Sterlite originally bid $2.6 billion for Asarco, a bid it withdrew when the global economic downturn struck and copper prices started falling. The tussle with Grupo began when the Mexican firm entered the fray in June last year with a $2.7 billion bid.
Asarco, which owns three copper mines in Arizona, is a 110-year-old firm and had filed for bankruptcy protection in 2005 after being sued for $1.6 billion over environmental issues. For the year 2008, the company had reported total revenues of nearly $1.9 billion and profit before tax of $393 million.