Deepak Fert weighs next move on MCFL

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Deepak Fertilizers and Petrochemicals is in no mood to back out from its bid to wrest control of the Rs 3,700 crore Mangalore Chemicals and Fertilizers (MCFL) in the face of a joint counter-bid by promoter Vijay Mallya and Saroj Kumar Poddar of the Zuari group.

The Pune-based company is weighing its options, including increasing its offer price beyond Rs 70. Mallya’s United Breweries and Poddar’s Zuari on Tuesday offered Rs 68.55 per share in their joint counter-bid against Deepak Fertilizers’ Rs 63 per share offer.

“We don’t think Deepak Fertilizers will be sitting pretty without countering the Zuari-UB counter-bid,” said an industry official, who did not wish to be identified.

Deepak Fertilizers bo­ard of directors will meet to approve the quarterly results on Thursday, when it is also decide its plan for MCFL.

The Shailesh Mehta-promoted firm has several options in hand. Apart from increasing its offer to above Rs 70 a share, the company may hunt for individuals, institutions and groups holding large chunks of Mangalore Chemicals & Fertilizers (MCFL) shares.

“This will allow the firm to pick up shares in off-market block deals to prepare the ground for a creeping acquisition of sorts, being the single largest stakeholder already,” the official quoted above said.

Deepak Fertilizers now owns 25 per cent in Mangalore Chemicals & Fertilizers while Poddar firms Zuari and Adventz own 16.43 per cent and UB Group the remaining 22 per cent. Analysts view a bid price beyond Rs 70-80 a share as unreasonable, notwithstanding the strategic advantage the company has on the west coast.

The MCFL board is set to meet on Thursday under the chairmanship of Vijay Mallya and decide the future course of action, including efforts to consolidate the UB group’s hold on the company with Poddar’s help.

Deepak Fertilizers is in an enviable position of comfortable liquidity and a healthy balance sheet and is well prepared to snap up a 26 per cent stake in MCFL, if at all its bid materialises against the combined might of Poddar and Mallya. DFPCL had originally planned to spend more than Rs 194 crore to acquire 26 per cent stake in MCFL. The deal value has since gone up to Rs 211.22 crore at the Zuari-UB counter-bid price.

Poddar too is not short of cash. He has the backing of Pilani Investments, the Birla family investment arm. Poddar is married to KK Birla’s daughter Jyotsna. In a filing to the stock exchanges, Ambit Corporate Finance and ICICI Securities on Tuesday made the offer on behalf of Zuari Fertilisers, Zuari Agro Chemicals, United Breweries, Kingfisher Finvest and McDowell to acquire 3.08 crore shares, constituting about 26 per cent stake, at Rs 68.55 apiece.

Mallya is soon expected to make public his plan to run MCFL jointly with Poddar once the 26 per cent counter-offer concludes successfully. Once that happens, Mallya may invite two Poddar nominees to join the MCFL board.


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