Calcutta, May 13: Adventz group chairman Saroj Poddar is stepping in as a white knight to help UB Group chairman Vijay Mallya stave off a hostile takeover bid by Deepak Fertilisers for Mangalore Chemicals and Fertilizers (MCF).
Zuari Agro, part of Adventz, has signed a deal with UB Group to become co-promoter of MCF and participate in the management of the Mallya company.
The two are now joining hands to launch a counter-offer for MCF at a price 9 per cent higher than that offered by Deepak Fertilisers.
The offer was triggered as the combined holding of Zuari and UB Group in MCF has exceeded 25 per cent.
While Zuari Agro, through its subsidiary Zuari Fertilisers and Chemicals, holds 16.43 per cent in MCF, UB Group holds a promoter’s stake of 21.98 per cent.
The combined shareholding is 38.4 per cent, triggering a counter-offer to Deepak Fertilisers’ open offer made on April 23 to acquire a 26 per cent stake (3,08,13,939 equity shares) in MCF at Rs 61.75 apiece.
Deepak Fertilisers, which now holds a 25.3 per cent stake in MCF though its subsidiary SCM Soilfert, had later raised the offer to Rs 63 per equity share on May 1.
Zuari Agro, which decided on the latest move after a meeting on May 12, today told bourses it was offering a price of Rs 68.55 per equity share in the counter-offer.
Zuari’s share buyout is valued at Rs 211.12 crore against Deepak Fertilisers’ Rs 194 crore. Zuari Fertilisers and Chemicals will finance the buyout.
“UB Group and the Adventz group intend to exercise their combined voting rights in concert towards key decisions relating to MCF. Vijay Mallya shall continue to be the chairman of the board of the company,” MCF said in a filing to the BSE.
The shares of MCF today closed at Rs 70.55 apiece on the BSE, 0.14 per cent higher than the previous close.
According to industry observers, the move from Poddar offers a lifeline to the cash-strapped UB Group, which by itself could have found it difficult to make a counter-offer as banks and financial institutions are unlikely to lend to the group after burning their fingers over Kingfisher Airlines’ debts.
Earlier, Saroj Poddar had said he and Mallya would together work on a solution that would prevent Sailesh Mehta’s Deepak Fertilisers from gaining a 51 per cent stake in MCF.
Reacting to today’s counter-offer, Deepak Fertilisers spokesperson Pranav Thakkar said, “The offer has just been announced. We shall evaluate the same and take necessary steps after consulting our investment bankers.”
The battle for a potential take-over of MCF had been going on for over a year now. Zuari Agro was the first to show interest and bought a 10 per cent stake in April last year. It was followed by Deepak Fertilisers’ acquisition of a 24.46 per cent stake in July 2013. Later Zuari Agro increased its stake in MCF to 16.43 per cent.
In a hostile takeover bid, Deepak Fertilisers raised its stake in MCF to 25.31 per cent from 24.46 per cent on April 23 this year and offered to buy another 26 per cent.
Zuari, Deepak and MCF compete in the fertiliser business, but the huge debt burden of the Mallya-led group has led to speculation about MCF being a takeover target.
Last year, Mallya had said he was ready to buy the holdings of Zuari and Deepak Fertilisers.