Deepak Fertilisers gives up on hostile bid for Mangalore Chemicals, sells 12% stake

Pune-based Deepak Fertilisers and Petrochemicals Corporation Ltd has sold close to half of its holding in Mangalore Chemicals and Fertilizers Ltd (MCFL) thereby giving up on its hostile bid for the UB Group firm company.

The company sold 12 per cent stake in MCFL through bulk deals on the bourses on Monday for approximately Rs 123 crore ($20 million).

It held 28.47 per cent stake in MCFL as of March 31, 2015, and post this transaction now holds just over 16 per cent through its investment entity subsidiary SCM Soilfert Ltd.

The company had sold 2.2 per cent stake in MCFL in January just weeks after buying additional stake in the firm in an open offer. It had also decided not to make a counter bid to Saroj Kumar Poddar-led Adventz Group’s voluntary open offer for 36.56 per cent stake in MCFL.

This had virtually sealed the battle in favour of Adventz after an intense takeover battle.

Currently, UB Group owns a 22 per cent equity stake and Saroj Poddar's Adventz group holds 16.47 per cent stake.

Deepak Fertilisers’ battle for taking control of MCFL started in July 2013 when it bought some stake in the firm and offered to acquire around 26 per cent stake in the firm through a hostile takeover bid.

Following this, Saroj Poddar came in as a white knight to protect Mallya’s hold over the company given that much of promoter holding was pledged with institutions.

In May 2014, Deepak Fertilisers hiked the offer price in its unsolicited open offer, increasing its price for an additional 26 per cent equity stake in Mangalore Chemicals to Rs 63 per share from its previous offer of Rs 61.75 per share.

Vijay Mallya joined hands with Poddar’s Adventz and together the two launched a rival joint open offer for Rs 68.55 per share.

As per the pact between UB group and Zuari Industries had signed earlier, Mallya would have been remained chairman on the board of Mangalore Chemicals if they jointly succeed to acquire controlling stake via an open offer.

However, this was tweaked after United Bank of India declared Mallya as a wilful defaulter on account of non-payment of dues. Mallya recently stepped down from the board.

In September, Deepak Fertilisers upped its offer price to Rs 93 per share from its previous offer. This allowed it to garner additional 6 per cent stake taking its ownership to over 31 per cent.

In December, Poddar came out with a fresh open offer to purchase over 30.7 million equity shares, comprising 26 per cent stake, in MCFL at a share price of Rs 91.92 each, 33 per cent more than what it had offered in its recently concluded offer which failed to garner many takers.

Later in December, Saroj Poddar-controlled Zuari Fertilisers and Chemicals Ltd and Zuari Agro Chemicals Ltd revised their open offer size for shares in MCFL to additional 36.56 per cent stake. Zuari group, however, retained the price for open offer at Rs 91.92 per share.

Its open offer is to start next week.

MCFL is a fertiliser maker with products like urea, di-ammonium phosphate, muriate of potash, granulated fertilisers, micronutrients, soil conditioners and specialty fertilisers. It is particularly strong in the southern region of the country.

(Edited by Joby Puthuparampil Johnson)

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