Is Deepak Fertilisers losing interest in MCF takeover bid?

It seems that the much heated takeover battle over Mangalore Chemicals and Fertilisers is likely to end in favour of the Saroj Poddar-Vijay Mallya combine with Deepak Fertilisers losing interest in taking control of the Mangalore-based company.

According to insiders, Deepak Fertiliser is not too keen to go aggressive on a price battle for what is considered as one of the last jewels in Mallya's crown, MCF. Incidentally, the Pune-based company has so far shown reluctance to revise its open offer as well.

"So far there is no decision on revising the open offer proposal. They don't want to go too aggressive on it," said a source in the company who did not wish to be named. Deepak Fertiliser's CFO Somnath Patil did not respond to telephone calls or text messages sent by Business Standard.

"Deepak has lost the appetite to fight it out with Poddar, as the Poddar-Mallya combine have a sizeable stake in the company. The option for Deepak now is to either sell off its shares in the open offer or sell it in the market," said a banker close to the transaction.

Both the open offer proposals, Poddar's joint open offer with Mallya and Deepak Fertilisers, are awaiting CCI nod as of now. Market regulator, Sebi has cleared both the open offer proposals. Poddar, in May, launched his Rs 211-crore counter bid for the company at Rs 68.55 a share to take on Deepak Fertilisers' earlier offer of Rs 63 a share. Mallya's UB group, which owns a 21.98% stake in MCF, is also supporting Poddar's bid to buy another 26%. As of June 2014, Deepak Fertiliser has a 25.3% in MCF while Poddar has 16.43%.

According to analysts, the open offer by Sailesh Mehta-led Deepak Fertilisers would not make much sense if the pricing is not revised as Poddar's offer is higher by Rs 5.55. On Tuesday, MCF shares closed at Rs 68.70 down by 0.22% on BSE. Open offers are expected to run its course within 12 days of receiving the nod from CCI.

Mallya, despite being in the middle of a financial crisis, will have a considerable say in the management of MCF even if Saroj Poddar's Adventz Group wins the battle against Deepak Fertilizers. Mallya, who will remain chairman for the next five years, can appoint three directors on the MCF board, compared with one for Adventz and will have the right of first refusal over Poddar's shares, according to an agreement signed between UB Group and Adventz on May 12.

The battle for MCF has been going for more than a year now. In fact, Poddar, at one point in time, had lost hope and had said he could sell his stake, but the Zuari chief had couple of meetings with good friend Mallya and both agreed upon to stall Deepak's bid with a joint open offer.