Mangalore Chemicals & Fertilizers Ltd surges 20 per cent as Deepak Fertilisers raises open offer price

MUMBAI: The battle to acquire Mangalore Chemicals & Fertilisers (MCF) and oust chairman Vijay Mallya has intensified. On Thursday, Deepak Fertilisers, which holds 25% in MCF, raised its open offer price from Rs 63 a share to Rs 93 for acquiring additional 25% stake in MCF. The Pune-based Deepak Fertilisers currently owns 25% in MCF. Within a few hours of the price revision by Deepak Fertilisers, rival Adventz Group along with the Mallya-led UB group, revised its open offer price from Rs 68.6 to Rs 81.6 to buy additional 26% stake of MCF. While Deepak Fertlisers holds around 25.3% stake in MCF, Adventz Group stake in the company is 16.4%. UB Group’s holding as on June 30, 2014, was 21.97%. MCF closed at Rs 88.10, touching the 20% upper circuit on Friday.

Some of the MCF shareholders have written to Sebi arguing that Mallya, declared as wilful defaulter by United Bank of India for non-payment of Rs 400 crore dues — should be removed from the company’s board. They have also demanded cancellation of all contractual ties between Adventz Group and Mallya as the two are acting in concert to exercise control over MCF. According to an agreement between UB and Saroj Poddar-led Adventz Group, Mallya would continue as MCF chairman for another five years if the two parties jointly secure controlling stake in the company. The agreement also allows Mallya to appoint three directors on the board and gives him the right of first refusal over Poddar’s shares in MCF.

In April 2013, Adventz Group bought 1.2 crore shares, or nearly 10% of MCF, which were pledged with banks to raise funds for Mallyapromoted Kingfisher Airlines. A takeover battle began when Deepak Fertilisers acquired 24.5% stake in MCF from the open market in July 2013. In the same month Adventz increased its stake to 16.4%.

In April this year, Deepak Fertilisers launched an open offer to buy 26% stake in MCF at Rs 63 a share when its stake in the company crossed 25%. Following this, Zuari and UB group joined hands in May and launched a counter open offer atRs 68.6. The CCI cleared Deepak Fertilisers open offer on August 19 while the Adventz Group open offer was approved on September 4. Both the open offers will be valid between October 1 and October 17.