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Vedanta resources group company, Sterlite Industries India Ltd (BOM: 500900) gained momentum on the Bombay Stock Exchange (BSE) as the company lost the takeover battle for Asarco.
16 Nov 2009
MUMBAI (Commodity Online): Vedanta resources group company, Sterlite Industries India Ltd (BOM: 500900) gained momentum on the Bombay Stock Exchange (BSE) as the company lost the takeover battle for Asarco.

Sterlite Industries stocks gained by over 3.3% on the Bombay Stock Exchange (BSE) today as the company’s rival suitor Grupo Mexico won the back control of copper miner Asarco.

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Company’s American Depository Receipt (ADR) surged 4.59% to USD 18.46 on Friday, 13 November 2009 on the New York Stock Exchange.

On the BSE, the stock hit a high of Rs.868.40 and a low of Rs.830.05 so far during the day. The stock had outperformed the market over the past one quarter, surging 26.84% as compared to the Sensex's return of 8.57%.

Putting an end to the year-long battle for control over bankrupt copper miner Asarco, a district court in Texas favoured Grupo Mexico's USD 2.4 billion bid over that of Sterlite Industries. The Mexico City-based conglomerate said Sunday, 15 November 2009 that US District Court Judge Andrew Hanen in Brownsville, Texas on Friday confirmed Grupo Mexico's plan to pay $2.2 billion to Asarco's creditors.

The ruling will return control of Asarco to Americas Mining Corporation, a Grupo Mexico subsidiary. The deal is expected to close by mid-December 2009.

Under the plan, Grupo Mexico will give USD 2.2 billion to Asarco to be distributed to creditors together with an estimated $1.4 billion in cash held by Asarco. Grupo Mexico also will guarantee a one-year note for USD 280 million payable to Asarco's asbestos creditors, forgive $161 million of Asarco tax obligations to Americas Mining, and release Americas Mining's claim to a $60 million tax refund that will, instead, remain with Asarco.

Sterlite, a unit of London-based Vedanta Resources, originally offered $2.6 billion to buy Asarco out of bankruptcy court protection but lowered the offer to about $2.1 billion amid the recession. Sterlite, however, sweetened its bid at $2.57 billion in cash, as the bidding war intensified.

Asarco, formerly known as American Smelting and Refining Company, is the third-largest copper producer in the US. The outcome involves Asarco's three Arizona mining operations and a Texas refinery placed in bankruptcy in August 2005 when the company ran out of cash and faced hefty environmental liability and potential asbestos-related claims.

Sterlite Industries is India's largest non-ferrous metals and mining company with interests and operations in aluminum, copper, zinc and lead and power. Sterlite Industries' main operating subsidiaries are Hindustan Zinc for its zinc and lead operations; Copper Mines of Tasmania Pty for its copper operations in Australia; and Bharat Aluminum Company for its aluminum operations.
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