Poddar turns cautious in 3-cornered MCF fight

Zuari chief had earlier said he'd sell his MCF stake to highest bidder

The open offer for liquor baron Vijay Mallya’s Mangalore Chemicals and Fertilizers by Deepak Fertilisers and Petrochemicals has forced Saroj Poddar, chairman of Zuari Agro Chemicals who holds more than 16 per cent in the takeover target, to tread cautiously.

Poddar has 16.43 per cent stake in MCF via Zuari Fertilizers and Chemicals.

Poddar had earlier said he would sell his stake in Mangalore Chemicals to the highest bidder.

“All I can say at the moment is we are looking into the matter. We are discussing it and exploring possibilities,” he said on Thursday, a day after the Pune-based Deepak Fertilisers informed the BSE that it, along with its subsidiary SCM Soilfort, planned to buy 30.8 million shares of Mangalore Chemicals at Rs 61.75 apiece, amounting to Rs 190.27 crore.

According to the latest filing by Deepak Fertilisers, it has bought 0.84 per cent of Mangalore Chemicals at Rs 62.50 a share, taking its stake to 25.31 per cent.

Deepak Fertilisers had placed an order with JM Financial Services to buy up to two million shares of Mangalore Chemicals, about 1.7 per cent of its stock, at not more than Rs 63 each.

Analysts said the options before Poddar were either to align with Mallya or sell out. Poddar has been exploring the first option ever since he bought into Mangalore Chemicals. Over the past several months, however, he had become vocal about selling his stake if he did not get management control.

According to Poddar, he holds the right of first refusal over the shares owned by Mallya in Mangalore Chemicals. During an exclusive interaction last year, Poddar had told Business Standard that he had an agreement with Mallya which gives him the right of first refusal over Mallya’s shares, in case the liquor baron plans to give away control.  

After the surprise entry by Deepak Fertilisers’ chairman Shailesh Mehta in the race for control over Mangalore Chemicals, Poddar had to increase his stake to 16.43 per cent through two rounds of stock purchase from the open market.

Poddar had bought around 10 per cent initially in April 2013. Deepak Fertilisers had bought  24.46 per cent shares on July 3, 2013. Mallya has close to 22 per cent stake in MCF.

Poddar had announced that he bought the stake in consultation with Mallya with intent to takeover the company without being hostile.

Interestingly, Mehta is open to talks with both Mallya and Poddar for an amicable solution. “We wanted to take over the company (Mangalore Chemicals) so we bought over 24 per cent in the first tranche. Our target is still the same, but we are happy to talk it out with key stakeholders. We do not want to go for a hostile takeover. That will only be considered if no other option is left open to us,” a source in Deepak Fertilisers said requesting anonymity.

A meeting between Mallya and Poddar cannot be ruled out. As of now, Poddar is keeping his cards close to his chest.
STAKES ARE HIGH

WHAT HAS HAPPENED:
According to the latest filing by Deepak Fertilisers and Petrochemicals, the company has bought 0.84% of Mangalore Chemicals and Fertilizers (MCF) at Rs 62.50 a share, taking its stake to 25.31%. Deepak Fertilisers had placed an order with JM Financial Services to buy up to two million shares of MCF, about 1.7% of its stock, at not more than Rs 63 each

WHAT SAROJ PODDAR MIGHT DO:
Analysts say the options before Saroj Poddar, chairman of  Zuari Agro Chemicals and holding about 16% in MCF and Fertilizers, are either to align with MCF promoter Vijay Mallya or sell out

WHAT PODDAR IS TRYING TO DO:
Poddar has been exploring the first option ever since he bought into MCF. Over the past several months, however, he has become vocal about selling his stake if he does not get management control. Poddar claims he has an agreement with Mallya giving him the right of first refusal over the shares owned by the promoter in MCF

WHAT DEEPAK FERTILISERS HAS INDICATED:
Deepak Fertilisers’ Chairman Shailesh Mehta is open to talks with both Mallya and Poddar. A source in the company says it does not “want to go for a hostile takeover”