Mumbai/Kolkata: The stage seems to be set for an
intense takeover battle between Deepak Fertilisers and Petrochemicals
Corp. Ltd and Zuari Fertilisers and Chemicals Ltd for Mangalore
Chemicals and Fertilizers Ltd.
On Tuesday, capping months of negotiations over a potential stake sale, Deepak Fertilisers sprang a surprise on liquor baron Vijay Mallya
with an unsolicited bid to acquire a 26% stake in Mangalore Chemicals
and Fertilizers, controlled by his group, through an open offer for Rs.190 crore
Mallya, whose UB Group holds a 22% stake in Mangalore Chemicals, could
lose management control if the Pune-based firm’s offer is fully
subscribed to by minority shareholders. The target company, which
produces farm inputs and posted Rs.2,790 crore in revenue in fiscal 2013, is valued at Rs.782 crore at its current market price.
A full-blown takeover battle could ensue, as another suitor for the company, Kolkata-based industrialist Saroj Poddar,
could make a counterbid, according to people familiar with his plans.
Poddar, who also owns a substantial stake in Mangalore Chemicals, is
expected to firm up his plans over the next few days in consultation
with Mallya.Shortly after the markets opened, Deepak Fertilisers said in a
regulatory filing that a wholly-owned subsidiary, SCM Soilfert Ltd, had
on Tuesday placed an order with JM Financial Services Ltd, a broking
firm, to buy up to two million shares of Mangalore Chemicals for a
maximum price of Rs.63 each.
On assumption that these shares would be secured, which would increase
its stake in Mangalore Chemicals to 26.1%, Deepak Fertilisers further
announced that it was making an open offer to acquire through its
subsidiary 26% more in the company in compliance with Indian takeover
laws.
Deepak Fertilisers has initially priced its open offer for 30.8 million shares at Rs.61.75
apiece, but it may have to raise it depending on the price it pays for
the proposed purchase of two million shares. The firm, valued at Rs.1,103 crore at its current market price, has held 24.5% in Mangalore Chemicals since last July.
Shares of both Mangalore Chemicals and Deepak Fertilisers jumped on
Tuesday on the back of heavy buying. In a flat market, Mangalore
Chemicals’ shares rose 6.6% to close at Rs.66.05, while those of Deepak Fertilisers moved up 4% to Rs.125.15 on the BSE. The benchmark Sensex gained 0.5% to close at 22,876.54 points.
Kolkata-based Poddar was also taken by surprise by Tuesday’s
development, but he is happy that the stalemate is now going to end,
said a person close to him. A little over a year ago, Poddar started
acquiring shares of Mangalore Chemicals and currently owns 16.43% of the
firm’s shares through Zuari Fertilizers.
In an interview a year ago, Poddar had said he wanted to take over
Mangalore ChemiIn the past year, Mallya has pared his holding in almost all UB Group
companies and isn’t the single largest shareholder in any, except UB
Engineering Ltd.cals but wouldn’t launch a hostile bid to wrest control
of the company from his “friend” Mallya. The UB Group chairman, too, had at that time, welcomed Poddar as an
investor in Mangalore Chemicals, fuelling speculation that he had been
brought in as a white knight to stave off potential takeover bids.In the past year, Mallya has pared his holding in almost all UB Group
companies and isn’t the single largest shareholder in any, except UB
Engineering Ltd...
Praveen sharma
pgdm 2nd sem
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