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The joint open offer proposal made by Saroj Poddar, chairman of Zuari Agro Chemicals, and tycoon Vijay Mallya for control of Mangalore Chemicals and Fertilizers (MCF) has been cleared by the Securities and Exchange Board of India (Sebi).
"The open offer could start from early August," Poddar said. He added no contact had been made by Deepak Fertilizers, the other suitor for MCF, to the Zuari chief.
Sebi had sought clarifications from the two bidders which had made offers for additional stake in MCF. The two are Deepak Fertilizers and Zuari Fertilizers and Chemicals. Zuari and Mallya, existing promoter of MCF, are "persons acting in concert".
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Poddar, in May, launched his Rs 211-crore counter bid for the company at Rs 68.55 a share, to take on Deepak Fertilizers' earlier offer of Rs 63 a share. Mallya's UB Group, which owns a 21.98 per cent stake in MCF, is supporting Poddar's bid to buy another 26 per cent. Market sources said Sailesh Mehta - chairman and managing director of Deepak Fertilizers could find it difficult to beat the combination.
Deepak Fertilizers has a little over 25 per cent in MCF. If a company acquires 25 per cent or more of the shares of a listed company, it must make an open offer to buy at least another 26 per cent from shareholders, according to Sebi rules.
Mallya, despite being in the middle of a financial crisis, will have a considerable say in the management of MCF even if Saroj Poddar's Adventz Group wins the battle against Deepak Fertilizers. Mallya, who will remain chairman for the next five years, can appoint three directors on the MCF board, compared with one for Adventz and will have the right of first refusal over Poddar's shares, according to an agreement signed between UB Group and Adventz on May 12.
Sources in Deepak Fertilizers said insiders were expecting a 'wilful defaulter' tag on Mallya to become a hurdle for the joint open offer. United Bank of India (UBI) had slapped a similar notice on Mallya recently, on the default in repayment of loans for his grounded Kingfisher Airlines. The high court here had directed that Mallya and members of Kingfisher's board of directors be represented by its law officers or the company secretary on a notice of showcause by the bank officials. UBI had alleged wilful default on payment of dues of nearly Rs 400 crore.
