Deepak Fertilisers steps up bid for MCFL, makes open offer

Open offer is being made following a proposal by the company and Petrochemicals Corporation Ltd to buy up to 20 lakh shares

Deepak Fertilisers, the biggest shareholder in Mangalore Chemicals and Fertilizers (MCFL), plans to buy an additional 20 lakh shares today and sought to wrest control of the Vijay Mallya promoted-company by making an open offer for another 26% stake for Rs 190 crore.

Deepak Fertilisers, which has a 24.46% stake in MCFL, has been engaged in a tug-of-war with Saroj Poddar-led Zuari Fertilisers for about a year for control of MCFL, which is part of the debt-ridden UB Group.

The open offer is being made following a proposal by Deepak Fertilisers and Petrochemicals Corporation Ltd to buy up to 20 lakh shares, representing a 1.7% of stake in MCFL, at Rs 63 per share today, the company said in a filing to the BSE.

After the proposed transaction, the company's stake in MCFL would rise to 26.1%, crossing the 25% threshold that requires it to make an open offer in line with regulator SEBI's norms. Sources said Deepak Fertilisers' stake had already crossed 25%.

The company plans to acquire up to 3.08 crore MCFL shares, comprising 26% of the Mallya firm's equity, at Rs 61.75 a share, aggregating Rs 190.27 crore.

MCFL shares rose 11.46% to Rs 69.05 a piece on the BSE in the late afternoon trade.

JM Financials Institutional Securities Ltd will manage the open offer for Deepak Fertilisers, which is acquiring the MCFL shares along with its subsidiary SCM SoilFert Ltd.

Last year, Zuari bought a 16.43% stake in MCFL and Deepak Fertilisers purchased 24.46%. Promoter UB Group holds about 22% in MCFL.

The three companies compete in the fertiliser business, but the huge debt burden of the Mallya-led group has led to speculation about MCFL being an apparent takeover target.

Any direct or indirect acquisition of shares amounting to a stake of 25% or more in a listed company triggers a mandatory open offer by the acquirer for additional shares.