Birlas throw their weight behind Poddar in MCF battle

Zuari offers Rs 68.55 for each MCF share, against Deepak Fertilisers' earlier offer of Rs 63 apiece

The Birlas have thrown their weight behind Saroj Poddar, chairman of Kolkata-based Adventz group and a family member, in his bid to take over the Vijay Mallya-promoted Mangalore Chemicals & Fertilizers (MCF). Poddar, who is married to Jyotsna, daughter of K K Birla, is in a race with the Sailesh Mehta-led Deepak Fertilisers for control of the Mallya company.

Pilani Investments, a holding firm owned by Century Textiles Chairman B K Birla and Aditya Birla Group chief Kumar Mangalam Birla, has joined the takeover battle as "persons acting in concert (PAC)" with Poddar's Zuari Fertilisers and Zuari Agro. As PAC, Pilani will give funds for takeover and own shares in MCF.

Poddar on Tuesday 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. Mallya's UB group, which owns a 21.98 per cent stake in MCF, is also supporting Poddar's bid to buy another 26 per cent. This puts together a combination Mehta might find difficult to beat.

Zuari Agro Chemicals had sold a land parcel for close to Rs 150 crore. It had mentioned the sale in its March quarter earnings.

According to Deepak Fertilisers sources, a counter offer had been factored in, so the move did not come as a surprise. A spokesperson for the company said: "The offer has just been announced. We shall evaluate it and take necessary steps after consulting our investment bankers."

Bankers, however, said both offers were likely to fail, as the price of the MCF stock had crossed Rs 70. On Tuesday, it rose 0.10 per cent over the previous close to end at Rs 70.55 apiece on BSE. "With today's offer, the entire battle is going to end in a settlement," said a banker close to the development. Mehta has already indicated that he is willing for a joint management of the company.

Zuari's move did not seem to impress its investors, either. On Tuesday, the Zuari Agro stock fell marginally to Rs 130 on BSE. Deepak Fertilisers shares were also down, by over two per cent to Rs 128.95.

When contacted, an Aditya Birla group spokesperson declined to comment. Insiders say this is the first time Pilani Investments has come out in support of a takeover battle since the group itself became part of a holding dispute, with an outsider, the Lodhas, receiving the late Priyamvada Birla's 25 per cent stake as part of her will in July 2004.

Pilani Investments, which owns a sizeable chunk of shares in Century Textiles and Aditya Birla Group companies, is important for both B K Birla and Kumar Mangalam Birla. Pilani also holds a minority stake in Zuari Global, an Adventz group company.

Birla family insiders say Poddar has received support from B K Birla and Kumar Mangalam Birla as the two had got the offer from the late K K Birla's shares in Pilani for free after the crisis emanating from Priyamvada Birla's will. "This is a case of the Birla family coming together to help one of its members at a time of need," said an old-timer. Interestingly, this is not the first time Kumar Mangalam Birla is helping a family member. He had earlier given a Rs 30-crore bailout to Yash Birla for paying off his fixed depositors, who had approached the Mumbai Police's economic offences wing after a default.