The Securities and Exchange Board of India on Tuesday approved the open offer of Vedanta Resources for Sesa Goa [Get Quote].

The open offer is being made by Vedanta Resources, a diversified industrial group with interests in metals and mining, to shareholders of Sesa Goa, after it bought 51 per cent stake held by Japan's Mitsui & Co in the Indian company for Rs 4,086 crore (Rs 40.86 billion) in April this year.

The price of the open offer is Rs 2,036 a share, the same price Vedanta paid to Mitsui for the acquisition of the majority stake.

Vedanta Resources was to launch the mandatory 20 per cent open offer within four days after the acquisition at the same price for the retail shareholders of Sesa Goa.

The company produces nearly 10 million tonnes of iron ore a year and has estimated reserves of 207 million tonnes. But the offer was delayed due to some clarifications sought by the regulator, said sources. The offer was to close by July, as per the earlier plan.

However, sources close to the development confirmed that it had secured the Sebi approval on Tuesday, and would be making the offer in coming days.

If the open offer is fully subscribed, the acquisition cost will go up to Rs 5,706 crore (R 57.06 billion). Vedanta will finance the deal through a fresh loan of $1.1 billion and internal accruals.

Vedanta's stake in Sesa Goa will go up to 71 per cent after the offer. In April, Anil Agarwal-controlled Vendanta Resources acquired Sesa Goa, the country's second-largest iron-ore producer, for Rs 4,086 crore (RS 40.86 billion), outbidding the Aditya Birla Group's Essel Mining & Industries, and the world's largest steel company Arcelor Mittal.

Vedanta agreed to pay Rs 2,036 a piece for Japan's second-biggest trading firm Mitsui's 51 per cent stake in Sesa Goa, to secure control over mines in Orissa, Karnataka and Goa.

"The acquisition will make Vedanta an integrated mining and metals company," Vedanta Chairman Anil Agarwal had said at the time of acquisition. Iron ore will contribute 11 per cent to the group's turnover.

The other companies of the group are Balco, Hindusthan Zinc, Madras Aluminium and India Foils [Get Quote].

Sesa Goa posted an operating profit of Rs 860 crore (Rs 8.6 billion) on sales of Rs 1,870 crore (Rs18.7) in 2006. As on March 31, 2006, the total income of Vedanta Resources was$3,701.8 million and profit after at $654.3 million.