Billionaire Anil Agarwal-promoted Sterlite Industries has secured the support of the US state legislators, local officials of Arizona state and workers for its proposed acquisition of copper-maker Asarco, company sources said, declining to be identified.
The legislators and local officials rejected estranged parent Grupo Mexico as future owner and suggested Vedanta Resources, the promoter company of Sterlite, in its place.
Asarco is based out of the south-western state of Arizona and had filed for bankruptcy protection under Chapter 11, wherein the company is seeking to reorganise and nurse itself to better financial health.
Opponents, including members of United Steelworkers, a trade union in the US, have lined up to bash Grupo, controlled by Mexico’s third-richest man German Larrea, and picketed Asarco’s mines and other facilities around Southern Arizona. The workers of Asarco’s mining operations plan to walk off the job if the company is handed back to a Mexico City conglomerate.
The president of American Federation of Labor and Congress of Industrial Organisations (AFL-CIO) John Sweeney issued a statement recently condemning Grupo Mexico and endorsing Sterlite’s bid for Asarco. Bucking the anti-Vedanta sentiments of environmental NGOs and members of Congress, John Sweeney urged the US Justice Department and the Attorneys General from 22 states to support the bid by Sterlite for Asarco.
Environmental NGOs have also written to the Attorney General asking the Justice Department to investigate Vedanta’s environmental track record overseas.
“When Asarco was controlled by Grupo from 1999 to 2005, the company unilaterally cut health care benefits for hundreds of retirees and disability benefits for other employees. Grupo Mexico has stripped Asarco of its most valuable assets,” said sources.
On May 31, Sterlite emerged as the lead bidder with $2.6 billion offer to buy Asarco’s operating assets. But Grupo, which has vowed to fight the Sterlite’s Asarco purchase, had proposed a $4.1 billion revival package.
Under the proposal, the company would put up $2.7 billion, use $1 billion, which Asarco has on hand, and then put in further $440 million, if needed.
Effectively, Grupo’s offer for the assets is about $100 million higher than Sterlite’s offer, said sources. Asarco has made over $1 billion in profits since filing for bankruptcy reorganization three years ago.
The company’s operating report for June showed net income of $36.5 million on sales of $150.1 million. Since filing for Chapter 11 bankruptcy protection on August 9, 2005, profits totaled $1.05 billion on sales of $4.16 billion.
Earlier this month, officials from Vedanta said they intend to double Asarco’s production if they take over the company.
