The Indian billionaire behind Vedanta Resources is set to spend up to £2 billion to build up a stake in Anglo American. The move, which could see Anil Agarwal acquire up to 12 percent in the blue-chip miner, is expected to fuel takeover speculation.
Anglo American’s share price rose in yesterday’s session, adding 1.23 percent to close at 1,194.50p, outperforming the broader London market, with the benchmark FTSE 100 index climbing 0.15 percent higher to 7,368.64. The miner’s shares have rallied more than 131 percent over the past year, and are up by just under three percent in the year-to-date.
Anil Agarwal’s Volcan Investments announced in a statement to the London Stock Exchange yesterday that it intended to make an investment in Anglo American shares of up to £2 billion. Volcan is a holding company wholly owned by the Agarwal family trust.
“This is an attractive investment for our family trust,” Anil Agarwal commented in the statement, adding that the blue-chip miner is “a great company with excellent assets and a strong board and management team who are executing a focused strategy to drive shareholder value”.
The Financial Times noted in its coverage of the news that while the investment is presented as a vote of confidence in the group’s management and strategy, rather than a prelude to an attempted takeover bid, the company was likely to view the move differently. One observer told the newspaper that the structure of the transaction suggested a broader strategic motive.
Volcan noted yesterday that it would issue bonds that would be secured by the Anglo shares. The company, however, confirmed that it does not intend to make an offer to acquire the blue-chip miner.