Govt opposes Hindustan Zinc's $2.98 billion deal for Vedanta zinc assets
The government holds a near 30% stake in Hindustan Zinc, while Vedanta owns almost 65%.

The Indian government has opposed Hindustan Zinc's (HZNC.NS) planned $2.98 billion acquisition of zinc assets from top shareholder Vedanta Ltd (VDAN.NS), amid concerns over valuations and the deal being a "related party transaction". Vedanta's sale of its zinc assets in South Africa and Namibia to Hindustan Zinc is critical to ensuring liquidity at parent company Vedanta Resources.
Analysts have said the deal was unfavourable to Hindustan Zinc's minority shareholders on valuations. The government holds a near 30% stake in Hindustan Zinc, while Vedanta owns almost 65%.
Directors nominated by the government at Hindustan Zinc had dissented to the proposed deal announced on Jan 19, a letter from the Ministry of Mines to the company showed. According to the letter, the government reiterated dissent to the "related party transaction". "We would urge the company to explore other cashless methods of acquisition of these assets."
The government said it will oppose any further resolutions on the deal and explore all legal avenues available to it.
"As far as Hindustan Zinc is concerned, we always believe in and operate in perfect manners of corporate governance, so (there is) no deviation on that count," Hindustan Zinc Chief Executive Arun Misra told CNBC-TV18 on Monday. Any board decision on related party transactions needs the approval of minority shareholders. Hindustan Zinc has three months from the deal announcement to hold the shareholders' meeting to seek approval for the deal.
Hindustan Zinc and Vedanta did not immediately respond to Reuters requests for comment.
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