Agarwal’s Vedanta to Buy Chip, Display Units From Twin Star

Swansy Afonso and Sankalp Phartiyal, Bloomberg News

Signage for Vedanta Resources Ltd. is displayed at the company's office building in Mumbai, India, on Thursday, March 6, 2020. The world’s most expansive lockdown to contain the coronavirus could slow the pace of distressed dealmaking in India, according to Vedanta Head of Mergers and Acquisitions Aarti Raghavan. Photographer: Kanishka Sonthalia/Bloomberg , Bloomberg

(Bloomberg) -- Vedanta Ltd. will acquire the semiconductor and display glass units from group company Twin Star Technologies Ltd. even as its foray in the electronics manufacturing sector with a planned investment of $19 billion drags mainly due to delay in state financing for the chip venture.

The Mumbai-based metals producer will buy 100% of Vedanta Foxconn Semiconductors Pvt. and Vedanta Displays Ltd. from Twin Star, a unit of Vedanta’s ultimate parent Volcan Investments Ltd., billionaire Anil Agarwal’s company said in an exchange filing Friday.

The purchase price is at a face value of 500,000 rupees ($6,043) per share for each unit. In addition, the semiconductor unit includes net operating liabilities of about 40 million rupees incurred toward general or administrative expenses, it said.

The deal puts the financing of the ventures on Vedanta Ltd.’s balance sheet, pressuring liquidity that is already tight due to record dividend payouts to parent Vedanta Resources Ltd. The company’s shares initially rose when the venture was announced back in September but plunged days later due to lack of clarity on ownership.

The Indian stock market regulator fined the company 3 million rupees last week due to violation of disclosure norms with regards to ownership of the venture.

Billionaire’s Chip Dreams Stymied as India Set to Deny Funding

Vedanta’s semiconductor push has dragged as the company and partner Hon Hai Precision Industry Co., widely known as Foxconn, could not get production-ready technology for the 28-nanometer chip they were initially seeking to build. New Delhi has asked Vedanta-Foxconn to reapply for state support to build 40-nanometer chips.

Vedanta has previously said Foxconn has secured manufacturing-grade 40nm technology. Even then, the Vedanta-Foxconn venture will have to disclose to the federal government their financing plans comprising equity and debt arrangements as well as their target customers to win crucial state funding for the project.

The transaction is expected to be completed in the current quarter, subject to necessary approvals, Vedanta said Friday.