Vedanta founder swoops in with possible offer after protester deaths

Vedanta directors have indicated they would be prepared to recommend a possible £778m all-cash takeover offer from founder Anil Agarwal, which comes amid a share slump after several protestors were killed by police at protests against the expansion of the company's Tuticorin copper smelter in India.

The proposed offer from Agarwal's Volcan vehicle, which already owns 66.53% of the FTSE 250 company's shares, will be made for a cash price of 825p, plus shareholders will be entitled to receive the previously announced final dividend of $0.41 per share. Together this represents a total value of 856p per share.

An independent committee formed to review and evaluate the proposal, has engaged in negotiations with Volcan and have reached an "agreement in principle on the key terms" of the possible offer.

At the proposed price, the company said the offer, not including the dividend, would be 13.5% higher than the average price over the past three months of 727p per Vedanta share, or 27.6% higher than the closing price of 647p at the end of last week. However, the shares have been as high as 981p in the past year and topped the £10 mark as recently as February last year.

At the end of May, the mining group was ordered to permanently close its Tuticorin copper smelter in India, where as many as 13 anti-expansion protestors were killed and scores injured when police opened fire onto a crowds earlier in the month.

The state government of Tamil Nadu told Vedanta's pollution control board to seal the smelter and shut the plant for good.

Opponents of the expansion plan in the city of Tuticorin, whose Indian name is Thoothukudi, said the plant is a major source of pollution and a risk to fisheries. The smelter has been shut down several times due to pollution complaints, and in 2013, it was fined £10m for breaching environmental norms and operating without consent from the state pollution board.

The government order endorsed the pollution board’s earlier statement that the plant should be closed to “protect and improve the environment” and the wider public interest, India's Economic Times reported.

Following the Tuticorin killings, John McDonnell, Labour's shadow chancellor, called for Vedanta Resources to be delisted from the London Stock Exchange, accusing it of operating "illegal mining concerns, trashing the environment and forcibly evicting local people", pointing to Amnesty International's accusations of human rights and environmental abuses in India, Zambia and elsewhere.

With so much going on, Vedanta's full-year results were pushed into the background as the miner said it swung to a net profit of $235.6m in the year to 31 March from a loss of $22.7m the year before, as revenue rose 33% to $15.4bn, driven by firmer commodity prices and volume ramp-ups.