Sesa Goa Limited, a majority-owned subsidiary of Vedanta Resources plc, the London-based FTSE 100 metal and mining group, and Dempo Group announced on Thursday that Sesa has acquired VS Dempo & Co Private Limited for a total consideration of Rs 1,750 crore (equivalent to $368 million), on a debt-free and cash-free basis, and includes working capital of Rs 145 crore (equivalent to $31 million).

VS Dempo & Co, in turn, also holds 100% equity shares of Dempo Mining Corporation Private Limited and 50% equity shares of Goa Maritime Private Limited.

The transaction has been funded by Sesa from its existing cash resources. As on March 31, 2009, Sesa had cash resources of Rs 4,143 crore (equivalent to $872 million). Sesa Goa shares were up 6.6% on the BSE on Thursday to close at Rs 192.10.

VSD has the righ0ts to mineable reserves and resources estimated at 70 million tonne of iron ore in Goa. VSD?s Goa mining assets includes processing plants, barges, jetties, transhippers and loading capacities at Mormugoa port.

It produced 3.94 million tonne of iron ore and sold 4.36 million tonne in the year ended 31 March 2009. VSD?s un-audited revenue and Ebitda in FY2009 were approximately Rs. 976 crore (equivalent to $213 million) and Rs 417 crore (equivalent to $91 million) respectively. VSD is one of the largest exporters of iron ore from Goa.

?We are highly delighted with this opportunity to consolidate our iron ore business. The integration of Sesa and VSD?s operations will achieve great synergy,? said Anil Agarwal, chairman, Vedanta.

VSD is a logical and strategic fit with Sesa?s existing iron ore business and is expected to create significant long term value for all shareholders through leveraging Vedanta?s proven mining and project management skills to develop and optimise VSD?s mines and plants; Access to attractive mining assets with long life; and Synergising with Sesa?s existing iron ore operations, a media release said.

Ambit Corporate Finance acted as financial advisors and J Sagar & Associates acted as legal advisors to VSD. Luthra and Luthra acted as legal advisors to Sesa Goa in this transaction.

Digging deep

•The transaction has been funded by Sesa from its existing cash resources

•VSD has the rights to mineable reserves and resources estimated at 70 million tonne of iron ore in Goa

•VS Dempo & Co also holds 100% equity shares of Dempo Mining Corporation Private Limited and 50% equity shares of Goa Maritime Private Limited

•VSD?s Goa mining assets includes processing plants, barges, jetties, transhippers and loading capacities at Mormugoa port