Battle heats up for control of Mangalore Chemicals

Minority shareholder asks SEBI to reconsider its permission granted to Zuari-UB combined open offer

September 16, 2014 11:46 pm | Updated 11:46 pm IST - MUMBAI:

The battle to control Vijay Mallya-led UB group’s Mangalore Chemicals and Fertilizers Ltd (MCF) has intensified with the Competition Commission of India (CII) clearing Zuari Fertilizer’s open offer to acquire additional 26 per cent stake in MCF at Rs.68.55 a share to counter Deepak Fertilizers and Petrochemicals Corporation’s (DFPCL) hostile bid to take over the company at Rs.63 a share.

Now that MCF shares are trading above Rs.70, both DFPCL and Zuari are likely to revise the open offer price. Officials involved in the counter offers said that discussions were on to increase the open offer price.

DFPCL was the first to make an open offer to acquire 26 per cent stake after it acquired 25.3 per cent stake in MCF from the open market in phases. Similarly, Zuari, which had also acquired above 16 per cent stake in MCF, was keen to increase its holding when MCF promoter Mr. Mallya decided to side with Zuari to ward off DFPCL’s bid.

Set for confrontation

Two Zuari companies of the Adventz group and three UB group companies are Persons Acting in Concert (PAC) in this open offer which has already received clearance from market regulator Securities and Exchange Board of India (SEBI).

Now the stage is set for open confrontation between the two sides to assume control of the company as more than 36 per cent of MCF shares are widely held.

Considering that MCF promoter and Chairman Mr. Mallya has been declared ‘wilful defaulter’ by Union Bank of India for not repaying loans advanced to Kingfisher Airlines, which has been contested by Mr Mallya, a minority shareholder Nagreeka Foils Ltd., which holds 3.5 lakh MCF shares, has written to SEBI asking it to reconsider its permission granted to the Zuari-UB combined open offer.

“As per the agreement reached between the Adventz group and the UB group, Mr Mallya is to continue to be Chairman for five years following the completion of the offer…the primary purpose of Zuari’s open offer is to acquire additional shares to enable Mr. Mallya to perpetuate control over MCF with the help of the Adventz group,” Nagreeka said in its letter.

Among others, Nagreeka has urged SEBI to unwind all contractual relationships with the Adventz group through which Mr. Mallya is acting as PAC and exercising control.

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