A day before MCF open offers begin, scrip hits fresh high on long term prospects

Ts high investor interest over the long term dividend that the company might offer

A day before two competing open offers begin on the bourses to acquire additional stake in Mangalore Chemicals & Fertilizers (MCF), the company’s stock hit a fresh 52-week high of Rs 98.45 a share on the BSE on Tuesday, before closing at Rs 97.80 for the day. According to analysts, the scrip could easily surpass the Rs 100-mark in the coming weeks.  Two groups - one led by Vijay Mallya’s UB group and Saroj Poddar’s Zuari group and the other led by Pune-based Deepak Fertilisers led by Sailesh Mehta - are vying with each other to acquiring controlling stake in MCF. Considered one of the last crown jewels of liquor baron Vijay Mallya, MCF is facing a takeover battle with two rival suitors revising their open offers to acquire additional stake in the company.

Poddar and Mallya have offered Rs 81.60 a share, while Deepak Fertilisers surprised the market with an offer of Rs 93.60 a share.

When Poddar first bought a 10 per cent stake in MCF in April 2013, the shares were trading at Rs 38 apiece on the BSE.  According to analysts, one of the reasons why the MCF stock rallied on Tuesday is high investor interest over the long-term dividend that the company might offer once there is clear mandate over the fact that who would be leading the company.

“The share price is greater than the aggressive price being quoted by Deepak Fertilisers, but some part of it is also due to less awareness of some shareholders who are thinking the prices for the open offer could still be revised, which is not the case,” said an analyst, who closely tracks MCF.

The battle for MCF has been on for about a year, during which the stock value almost trebled. “The stock price would go further up in the coming weeks, but the ones who are looking to exit could sell off their shares in the open offer, while the ones who stay intact are here for long-term gain,” said the analyst quoted above.

Deepak Fertilisers’ president and chief financial officer Somnath Patil’s comment while announcing the revised open offer clearly pointed to the firm’s high interest in MCF. Analysts also of the view that considering the synergies and geographical spread, MCF would be a positive fit for Deepak Fertilisers.