The year-long tussle between mining giant Grupo Mexico and Sterlite Industries to buy bankrupt US copper miner Asarco seems to have reached a stalemate. Sterlite Industries, a subsidiary of London-listed Vedanta Resources Plc, on Thursday increased its cash component by another $500 million to nearly $2.1 billion, indicating that it was not willing to let go the deal easily. This is for the second time in less than 10 days that Sterlite has increased the cash component for Asarco.
Industry watchers say the end result could turn out to be an auction-like situation, where the bankruptcy court might consider an auction after evaluating the offers. ?There does not seem to be an easy end to this and the deal seems to be heading to an auction-like situation,?said PwC principal consultant Dipesh Dipu. Agreeing to this possibility, Rahul Singhvi, an analyst with Sharekhan, said, ?The auction-like situation is very much possible. However, it is very difficult to say how this deal would shape up.?
The current Sterlite’s offer comes at a time when a bankruptcy court in Texas, US, is taking a final view of the two competing bids and is expected to handle the control of Asarco to one of the two firms soon.
Sterlite Industries’ shares on Thursday were up 1.44%, to close at Rs 619.35 on the Bombay Stock Exchange. Sterlite had last week revised its offer to $1.59 billion in cash.
The revised offer of $2.1 billion in cash has now almost matched that of its rival Grupo Mexico’s cash component. Grupo Mexico has reportedly offered a cash component of $2.2 billion in its bid to regain control over the target company.
Meanwhile, Sterlite has also proposed to support a plan of reorganisation that is intended to pay creditors in full their allowed amount of claims and full post-petition interest. All the other terms and conditions of the agreement remain unchanged, the company added. Sterlite had earlier said that it would not increase the bid any further as it was confident of winning it. Anil Agarwal, chairman of Vedanta, had claimed earlier that Vedanta would become the third-largest copper producer in the world if the Asarco deal goes through.
US-based Harbinger Capital, which was also in the race to acquire Asarco, has already withdrawn its $500-million offer and is reported to be supporting Sterlite’s bid. Meanwhile, Vedanta has already claimed that its bid for Asarco is being backed by the US government and the trade union.