Billionaire Agarwal Ups Stake in Anglo American by $2bn

Mining and Exploration
25/09/2017 10:23

Last week, BloombergMarkets reported that Anil Agarwal - the founder and controlling shareholder in Indian resource giant Vedanta Resources Plc. - who in March paid $2.5 billion for 12.43 percent stake in Anglo American, intends to purchase an additional 9 percent stake for $2 billion. The 20 percent stake will make him Anglo’s largest shareholder with voting rights. According to a statement the purchase was a family investment and Agarwal doesn’t intend to make a takeover offer for the company.

"We are encouraged by the performance of Anglo American since our original investment earlier this year," said Agarwal. "The company has made good progress in its operational and financial performance and remains an attractive investment for our family trust." Prior to news of the sale, the stock had climbed 12 percent this year. In July Anglo said the surge in profits had helped them to pay off more debt than planned, in part due to rising iron ore and coal prices. As such, it said it would be reinstating its dividend six months earlier than planned.

Agarwal’s stake purchase in Anglo American came after the company last year rebuffed his offer to merge part of his mining business. The purchase is to be funded by a mandatory exchangeable bond, organized by JP Morgan, issued by his family holding company and secured by Anglo stock. The sale is expected to close somewhere near Oct. 10 and the bond matures in 2020, at which time Agarwal has two options, he can return the shares to the original investors or pay cash to own them outright.