BackSaroj Poddar launches open offer for Mangalore Chemicals
Zuari group launches open offer to acquire 37 million shares of Mangalore Chemicals at Rs91.92 a share
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Mumbai: Saroj Kumar Poddar-controlled Zuari Fertilisers and Chemicals Ltd and Zuari Agro Chemicals Ltd have offered to spend as much as ₹ 282.2 crore to buy 25.9% of Mangalore Chemicals and Fertilizers Ltd from public shareholders, setting the stage for another battle to gain control of the fertilizer maker.
The two Zuari companies have offered to buy as many as 30.7 million shares of Mangalore Chemicals at a price of ₹ 91.92 a share, a 6.69% premium over Thursday’s closing price.
“This open offer is not subject to any minimum level of acceptance," Zuari Group told stock exchanges.
The voluntary open offer has been launched by companies belonging to Poddar’s Adventz Group without UB Group’s associate companies. ICICI Securities Ltd will manage the open offer for Adventz Group.
The voluntary open offer comes a month after a bidding war for shares in Mangalore Chemicals ended inconclusively, with Deepak Fertilisers and Petrochemicals Corp. Ltd managing to raise its stake to just around 31.25% in the company.
UB group chairman Vijay Mallya had joined forces with Kolkata-based Poddar to launch a counter-bid against Deepak Fertilisers to retain control of Mangalore Chemicals. Currently, the Mallya-Poddar combine holds around 38% in Mangalore Chemicals.
The battle for control of Mangalore Chemicals is likely to intensify.
“The war has been reopened by Zuari Group, as the premium offered to shareholders of Mangalore Chemicals on today’s closing price is substantial. Now there is a fresh lease of life for the open offer episode. The result depends upon Deepak Fertilisers’ counter offer to Zuari Group," said Arun Kejriwal, director of Kejriwal Research and Investment Services Pvt. Ltd, an advisory.
Investors were expecting a higher price from Adventz group, according to Ambareesh Baliga, an independent market analyst. “I doubt how much response will be there at this price," Baliga said.
In the initial open offer, Pune-based Deepak Fertilisers had valued Mangalore Chemicals at an impressive 15.2 times its 2013-14 net profit and offered ₹ 288 crore to minority shareholders to amass a controlling stake in the company, but its bid for 26% of the company’s shares was trumped by a sudden spurt in the market price of the company’s stock, following which Deepak Fertilisers raised its offer price to ₹ 93.60 apiece at the end of September.
Mallya and Poddar’s counter bid at ₹ 81.60 a share received only about 40,000 shares.
On Thursday, shares of Mangalore Chemicals were unchanged at ₹ 86.15 on BSE, while the exchange’s benchmark Sensex rose 0.42% to 28,562.82 points.
Executives at Deepak Fertilisers declined to comment on the development immediately.
The public float of Mangalore Chemicals shares is around 30%.
Since 20 October, the day the first round of open offer was closed, shares of Mangalore Chemicals have declined by 10.03% till date.
UB Group chairman Mallya is not part of the latest voluntary open offer as he was declared as a wilful defaulter by some lenders.
Kingfisher Airlines Ltd and its directors, including Mallya, have been declared wilful defaulters by at least two creditors of the airline, which owes more than ₹ 7,500 crore to lenders led by State Bank of India.
On 25 November, Reserve Bank of India (RBI) governor Raghuram Rajan had stern words for companies who have wilfully defaulted on loans to banks, saying that such borrowers should be seen as freeloaders rather than being celebrated as captains of industry.
Rajan also indicated that regulatory forbearance given to restructured loans will end as per schedule starting April 2015. “We need a change in mindset, where the wilful or non-cooperative defaulter is not lionized as a captain of industry, but justly chastised as a freeloader on the hardworking people of this country," Rajan had said.
Sebi is also in discussions with RBI to tighten wilful defaulter norms to make it tougher for such firms to access capital from the public markets.
On 1 December, in a move that took almost everyone by surprise Mallya resigned as director of Mangalore Chemicals. His step mother Ritu Mallya was named director on Thursday. Mallya’s exit is seen as an effort to sequester the company from his own considerable financial troubles. Mallya has also sought a personal hearing by the grievance redressal committee of United Bank of India to argue against the bank’s decision to label United Breweries Holdings Ltd a wilful defaulter.
Aniek Paul in Kolkata contributed to this story.
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