A LEGAL fight seems likely between Sterlite Industries and US copper miner Asarco LLC. The American company has filed a lawsuit against Sterlite for going back on a twoyear old deal to acquire Asarco. This prompted Sterlite to also file a lawsuit against Asarco to claim recovery of about $50 million (about Rs 230 crore) that was deposited earlier.
In a lawsuit filed with the US Bankruptcy Court in the Southern District of Texas on March 17, Asarco said it had to incur additional costs after Sterlite backed out of an agreement to acquire the US company for $2.6 billion (Rs 11,960 crore). The Anil Agarwal-controlled Sterlite nixed the contract after a fall in copper prices overvalued its bid for Asarco.
Eventually, the US court struck down Sterlite’s proposal and approved a bid by rival bidder Grupo Mexico.
Typically, bid contracts for acquiring companies contain clauses that stipulate penalties if bid amounts are changed after an agreement between two parties. However, a senior Sterlite executive said there was no change. “Our final bid was the same as that of the earlier amount, and just had different components. The new bid also totalled $2.6 billion,” he said, requesting not to be named.
A Sterlite spokesperson declined to comment saying the matter was sub-judice. On June 1, 2008, Sterlite agreed to buy the operating assets of Asarco for $2.6 billion in an allcash deal. The liquidity meltdown and a crash in copper prices two months later, made Sterlite change the components of the bid to include a non-cash part also.
Sterlite also filed a lawsuit against Asarco claiming recovery of about $50 million it had deposited with Asarco, prior to making its bid, sparking speculation that the two companies were preparing for a long drawn legal battle.
The Anil Agarwal-controlled Sterlite has been in the limelight these days. Afew days back, Sterlite’s parent, London-listed Vedanta Resources was exploring options to spin off a $20 billion aluminum division into a separate company. The company is also facing hurdles from the government on a bauxite mining project in Orissa, where activists claimed, Vedanta had flouted norms. Vedanta has steadily denied the charges.
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