Sebi clears Zuari Fertilisers-UB Group joint bid for Mangalore Chemicals

The Securities and Exchange Board of India (Sebi) has approved an open offer by  Zuari Agro Chemicals and the UB Group for Mangalore Chemicals and Fertilizers (MCF), giving beleaguered industrialist Vijay Mallya, whose firm was under a hostile takeover attempt by rival Deepak Fertilisers, some respite.

Deepak Fertilisers had raised its stake in MCF to a little over 25 per cent on 23 April, which made it mandatory for the company to make an open offer. Deepak offered to acquire another 26 per cent hares at Rs63 per share.

Deepak Fertilisers had  planned to acquire up to 30.8 million equity shares of Mangalore Chemicals from public shareholders at an offer price of Rs61.75 a share, for a total consideration of up to Rs190.27 crore (See: Deepak Fertilisers to make open offer for 26% stake of Mangalore Chemicals). 

MCF's existing promoter Mallya then teamed up with Suraj Poddar's Zuari to make a rival offer at a higher price of Rs68.55 per share.

MCF has been facing a severe financial crunch in the wake of the financial crisis that hit Kingfisher and Deepak had offered to pay Rs63 per share for acquiring another 26 per cent in the company.

SebiI approved the joint bid after seeking clarification from both the rival groups, following which as the existing promoters of MCF (UB) and Zuari have been considered as ''persons acting in concert''.

Zuari owns 16.43 per cent stake in MCF while Mallya's UB Group owns 22.91 per cent though half of its shareholding is pledged.

Sebi had earlier sought clarifications from JM Financial (merchant banker for Deepak Fertilizer group) on 20 June. The market regulator had, earlier, sought additional details from ICICI Securities and Ambit Corporate Finance, who are acting as merchant bankers for Zuari in their proposed open offer for MCFL (See: Sebi seeks clarifications on rival bids for Mangalore Chemicals).