Deepak Fertilisers ups ante for Mangalore Chemicals

Raises offer price to Rs 63 a share; Zuari's Saroj Poddar may make his move next week

Deepak Fertilisers and Petrochemicals has raised its offer price to Rs 63 a share for control over Vijay Mallya's Mangalore Chemicals and Fertilisers.

Deepak Fertilisers had announced an open offer on April 23 to acquire an additional 26 per cent in Mangalore Chemicals after increasing its stake to 25.31 per cent. Mallya' UB Group holds around 22 per in Mangalore Chemicals.

In a filing with the Bombay Stock Exchange on Friday, Deepak Fertilisers said that it, along with its subsidiary SCM Soilfort, planned to buy another 30.8 million shares of Mangalore Chemicals at Rs 63 apiece, amounting to Rs 194.12 crore.

Zuari Agro Chemicals'  Chairman Saroj Poddar, another contender for control over Mangalore Chemicals, declined to comment on the revised offer, but sources close to him said he might take a decision next week after meeting financial advisers. Zuari Fertilisers and Chemicals, a subsidiary of Zuari Agro Chemicals, owns a 16.43 per cent stake in Mangalore Chemicals.

Initially intending to sell his stake to the highest bidder, Poddar had reviewed his stance after Deepak Fertilisers made its its open offer on April 23. "We are waiting for Poddar to react. We are doing our bit step by step. Now it is time to see the reaction," said a source in Deepak Deepak Fertilisers who did not wish to be named.

Analysts, however, said the revised offer was lower than Mangalore Chemicals'  market price. On Friday, the Mangalore Chemicals stock opened at Rs 69.05, hit a high of Rs 75.30 and closed at Rs 72.75 with a gain of 4.98 per cent over the previous close.

"When the battle for control over Mangalore Chemicals started, its stock was trading in the range of Rs 35-40. Now it is above Rs 70, so much would depend on Poddar's move," an analyst who did not wish to be named said. As of now, Deepak Fertilisers was ahead in the race, he added.

Shares of Deepak Fertilisers closed 1.59 per cent higher at Rs 134.40 today.

Deepak Fertilisers bought a 24.46 per cent stake in Mangalore Chemicals on July 3, 2013. It did not make an open offer then, as its holding was just below the 25 per cent trigger for an open offer. In April 2013, Zuari Fertilisers and Chemicals had acquired a 10 per cent stake in Mangalore Chemicals. Poddar had to increase this to over 16 per cent in July 2013 after the Deepak Fertilisers move.

Deepak Fertilisers acquired 1 million shares at Rs 62.50 each on April 23, 2014, which amounts to 0.8 per cent of the voting capital in Mangalore Chemicals. Its initial plan was to acquire 2 million shares, representing 1.7 per cent of the voting capital. With this transaction, its holding in Mangalore Chemicals has gone up to 25.3 per cent.