SEBI seeks clarification on rival bids for Mangalore Chemicals
Moneylife Digital Team 24 June 2014

Zuari Fertilisers, Deepak Fertiliser and Mangalore Chemicals & Fertilisers compete with each other in the fertilizer business, but a huge debt burden had triggered a takeover battle for the Vijay Mallya-led group unit

Market regulator Securities and Exchange Board of India (SEBI) has sought clarifications from two rival bidders who have made offers for acquisition of additional stakes in Vijay Mallya-led UB Group's Mangalore Chemicals and Fertilisers Ltd (MCFL).

 

The clarifications have been sought through merchant bankers of the two rival bidders -- Deepak Fertilisers and Zuari Fertilisers, among which the latter has been joined by the existing promoters of MCFL as 'persons acting in concert'.

 

According to latest data made public by SEBI, the clarifications were sought from JM Financial (merchant banker for Deepak Fertiliser group) on 20th June. Prior to that, SEBI sought additional details on June 17th, from ICICI Securities and Ambit Corporate Finance, who are acting as merchant bankers for Zuari in their proposed open offer for MCFL.

 

SEBI was still awaiting replies from the merchant bankers for both the open offers, says the latest update on 'processing status of draft offer documents' filed with the capital markets regulator as on 20th June.

 

It could not be ascertained whether there have been any developments since then and the next update would be provided by SEBI next week.

 

An open offer for acquisition of additional stake in a listed company can move forward only after issuance of 'observations' by SEBI.

 

The battle for MCFL started in April last year when Zuari Fertilisers bought about 10% in the company from SBI group entities in the open market.

 

Deepak Fertilisers followed with acquisition of a 24.46% stake in MCFL in July 2013. Zuari group then increased its stake to 16.43% in the same month.

 

Zuari, Deepak Fertiliser and MCFL compete with each other in the fertiliser business, but a huge debt burden on the Mallya-led group had triggered a takeover battle for MCFL.

 

Earlier in May this year, UB Group joined hands with the Zuari group to ward off a hostile takeover bid by Deepak Fertilisers for MCFL and offered to buy more shares in the firm at a 9% higher rate than their rival.

 

This counter offer came less than a month after Deepak Fertilisers raised its stake in the firm to 25.31% and made an open offer to buy an additional 26% at Rs63 per share, totalling Rs194 crore.

 

Saroj Poddar-led Zuari group has teamed up with the UB Group in its offer to buy a 26% stake for Rs68.55 per share for a total of Rs211.22 crore in MCFL.

 

UB Group currently holds nearly 22% stake in MCFL, but over half of their shareholding is pledged.

 

SEBI received the draft offer document from Deepak Fertilisers for an open offer worth Rs190.28 crore on 8th May. This was followed by receipt of the draft offer document by the Zuari group on 27th May for an open offer worth Rs211.23 crore.

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