Govt plans to resist Hindustan Zinc's proposal to buy Vedanta assets

The government plans to reject Hindustan Zinc's offer to pay $2.98 billion for Vedanta's global zinc assets.

The government that plans to sell its nearly 30% stake in Hindustan Zinc through a sell offer mechanism is likely to vote against the plan because of concerns about everything from high valuations to the fact that it is a related party.

They added that the government is trying to convince Hindustan Zinc to withdraw the proposal and claimed the idea was pushed through despite government officials refusing to approve it.

Last month, Hindustan Zinc and its parent company decided to buy the assets of THL Zinc Mauritius in 18 months in a phased acquisition. THL's activities include Skorpion Zinc (Pty) in Namibia and Black Mountain Mining (Pty) in South Africa.

Analysts have warned that the expensive deal will deplete Hindustan Zinc's cash reserves, of which Vedanta owns about 65%. Regular dividend payments from the unit to the parent company have helped increase cash flow for Vedanta Resources.