Warring suitors woo Mallya in MCF battle

Mallya holds 20% in Mangalore Chemicals and has no option but to sell his shares as half of this stake in pledged by him with banks

With no clear winner in sight on the takeover of Mangalore Chemicals & Fertilizers (MCF) by either of its two suitors, Saroj Poddar and Shailesh Mehta, it is present chairman Vijay Mallya who is keeping everyone waiting on his plan.

Mallya’s UB Group holds 20 per cent stake in MCF but has no option but to sell his shares, as half of this stake is pledged by him with banks for other liabilities.

Sources say Mehta’s Deepak Fertiliser, which has bought 24.5 per cent stake, has initiated talks with Mallya and these will continue for quite some time. Even if banks sell half of Mallya’s stake to recover their loans, Mallya’s blessings are necessary for either Poddar or Mehta to take over the company. JM Financial’s Nimesh Kampani is leading the talks on behalf of Deepak Fertiliser with Mallya. Kampani and Mallya worked closely on the Diageo deal, as JM was banker to the United Spirits’ sale transaction.

On the other hand, sources say, Poddar (who has 16 per cent in MCF) is also open to holding discussion with Pune-based Deepak Fertilisers for buying out its 24.46 per cent stake.

But why would Deepak exit after spicing up the MCF battle? Poddar explains that his “friend”, Mallya, was miffed with the Pune-based company as they did not inform Mallya before buying a substantial amount of shares in MCF. “We are open to discussing the matter with Deepak. Vijay was not happy with them. He told me in London that two companies buying shares in his company can't force him to exit,” said Poddar, adding that Mallya categorically mentioned, “I am not a seller,” However, Mallya is in touch with both the parties.

When asked, Deepak’s chief financial officer, Somnath Patil, refused to comment on whether it had got adverse feedback from Mallya and if it would be interested in exiting the race as Poddar, head of the Adventz Group, says he has the right of first refusal.

Poddar, also in the midst of another takeover battle in Kalindee Rail,  said the move to even buy out Deepak's stake would be in consultation with Mallya.  “I don't see any further reason to buy any per cent of shares from the market anymore because Mallya has to decide. It’s about one final call now,” he added.

Poddar was planning a friendly takeover of MCF but Deepak's sudden entry had jolted the plan. Poddar has been maintaining that all his moves were in consultation with Mallya.

What is interesting is that Mallys, after agreeing to sell the company to Poddar, had walked away from the table. This led to Deepak Fertilizers buying a sizable amount of shares from the market, from an assortment of shareholders.
ON THE TABLE

• Vijay Mallya holds 20 per cent stake in Mangalore Chemicals & Fertilizers and has no option but to sell his shares as half of this stake in pledged by him with banks
• Sources say Deepak Fertiliser, which has bought 24.5 per cent stake in MCF, has already initiated talks with Mallya, which will continue for the next few months
• JM Financial’s Nimesh Kampani is leading the talks on behalf of Deepak Fertiliser with Mallya