Zuari & UB Group join hands to retain control of Mangalore Chemicals

May 14 2014, 04:38 IST
Comments 0
SummaryUB Group chairman Vijay Mallya to up the bid price for a 26% stake in MCFL to R68.55 per share. If the bid for the shares succeeds, it will cost R211 crore.

Determined to thwart the move by Deepak Fertilisers and Chemicals, which has been trying to acquire a controlling interest in Mangalore Chemicals and Fertilizers (MCFL), Adventz Group chairman Saroj Poddar on Tuesday teamed up with

UB Group chairman Vijay Mallya to up the bid price for a 26% stake in MCFL to R68.55 per share. If the bid for the shares succeeds, it will cost R211 crore.

The counter-bid is significantly higher than the open offer price of the Sailesh Mehta-run Deepak Fertilisers of R63 per share; in April, the Pune-based firm had raised its stake in MCFL to 25.31%, from 24.46% and announced the open offer. On Tuesday, the MCF stock closed at R70.55 on the BSE.

Given that Poddar’s Zuari Fertilisers and Chemicals (ZFC) holds a 16.43% stake in MCFL and the promoter United Breweries (UB) group has a shareholding of 22.91%, the combined stake of 39% is higher than the 25% that triggers an open offer.

Zuari Agro said in a filing on the exchange that the board at its meeting on May 12 had passed resolutions relating to agreements with ZFC and the promoters of MCF to participate in the management of the Mallya-controlled company and exercise voting rights as per the terms of such agreement.

ZFC is a wholly-owned subsidiary of Zuari Agro Chemicals. In a release, the firm said that according to the agreement between the two groups, Mallya would continue to be the chairman of the board of MCF. However, ZFC would be funding the counter-bid.

Analysts point out that a stake in MCF gives Deepak Fertilisers additional capacity and a foothold in urea manufacturing. Fresh capacities are likely to be commissioned only in a couple of years. Sources say Zuari is coveting MCF to explore synergies between the businesses as the plants are located within close proximity of each other.

On Saturday, Poddar had said he and Mallya were “working jointly” to come up with a strategy to take over the Bangalore-based company. It was in April last year that Zuari Fertilisers first picked up close to a 10% stake in MCFL, both from State Bank of India group entities and from the open market. Thereafter, it consolidated the stake in a couple of tranches. In July, Deepak Fertilisers acquired a 24.46% stake in the UB Group company.

Zuari’s filing noted: “Pursuant to the execution of the aforesaid agreement, the Acquirer has issued a Public Announcement

Single Page Format
Ads by Google

More from Frontpage

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...