Vedanta shares surge to record after demerger into five firms gets NCLT nod
The Vedanta demerger into five firms will allow the billionaire Anil Agrawal-led company to reduce its multi-billion-dollar debt at the parent level.
Shares of Vedanta Ltd. surged to a record on Tuesday after a tribunal approved the company's demerger into five separate units.
A two-member panel of the National Company Law Tribunal in New Delhi gave its nod to break up Vedanta's business into five separate units, four of which will focus on power, oil & gas, iron ore and aluminium. A detailed copy of the order wasn't immediately available.
Vedanta's share price erased all losses and surged as much as 4.18% to hit a record high of ₹573.00 intraday, even as the benchmark Sensex traded 0.63% lower at 84,679.86 points.
The Vedanta demerger, which has been in the works for some time, will allow the billionaire Anil Agrawal-led company to reduce its multi-billion-dollar debt at the parent level. The split would also help advance the company’s expansion plan, including a $10 billion three-year capital expenditure program to boost capacity and earnings.
The business restructuring was challenged by India's oil ministry over unpaid claims. The government also alleged concealment and misrepresentation of assets. However, Agarwal has championed Vedanta's restructuring as a way to reduce debt and allow each business to pursue its own growth strategy.
“The approval removes uncertainty about the company’s corporate strategy and could pave the way for a simpler corporate structure and new fundraising options,” Bloomberg Intelligence analyst Mary Ellen Olson said.
