UB Group, Zuari team up to seek control of Mangalore Chemicals

Vijay Mallya's UB Group today joined hands with the Zuari group to ward off a hostile takeover bid by Deepak Fertilisers for Mangalore Chemicals and Fertilizers (MCFL) and offered to buy more shares in the firm at a 9 per cent higher rate than their rival.
The partnership between the two key shareholders in MCFL marks the next stage of a bitter battle between the Zuari group and Deepak Fertilisers to wrest control of the UB Group company, which has been on for over a year.
The counter offer comes less than a month after Deepak Fertilisers raised its stake in the firm to 25.31 per cent and made an open offer to buy an additional 26 per cent at Rs 63 per share, totalling Rs 194 crore.

The Saroj Poddar-led Zuari group, which holds a 16.43 per cent interest in MCFL, today teamed up with the UB Group and offered to buy a 26 per cent stake for Rs 68.55 apiece for a total of Rs 211.22 crore. The UB Group holds 21.98 per cent stake in MCFL.
For the new-found partners, Zuari Fertilisers, Zuari Agro Chemicals, United Breweries (Holdings), Kingfisher Finvest India and McDowell Holdings offered to acquire about 3.08 crore shares.
The counter offer price is 9 per cent higher than the Rs 63 per share offered by Deepak Fertilisers, MCFL said in a filing to the BSE. MCFL shares rose 0.14 per cent to close at Rs 70.55 on the BSE.

In a hostile takeover bid, Deepak Fertilisers raised its stake in MCFL to 25.31 per cent from 24.46 per cent on April 23 and offered to buy another 26 per cent.

The Mallya-led UB group and the Zuari group have entered into an agreement in relation to their shareholdings in MCFL. Both groups "intend to exercise their combined voting rights in concert towards key decisions relating to the company."
Mallya will continue as MCFL chairman, the filing said.
The accord between the two groups triggered the open offer, which Zuari Fertilisers and Chemicals will fund, it said.
Deepak Fertilisers spokesperson Pranav Thakkar said: "We are evaluating the counter offer and will take necessary steps after consulting our investment bankers."

The battle for MCFL started in April last year when Zuari Fertilisers bought about 10 per cent in the company from SBI group entities and the open market.
Deepak Fertilisers followed with the acquisition of a 24.46 per cent stake in MCFL in July 2013. Zuari group then increased its stake to 16.43 per cent in the same month.
Zuari, Deepak and MCFL compete in the fertiliser business, but the huge debt burden of the Mallya-led group has led to speculation about MCFL being a takeover target.