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Sailesh Mehta-run Deepak Fertilisers & Petrochemicals Deepak Industries now leads the race to acquire a majority control over Vijay Mallya’s Mangalore Chemicals and Fertilisers (MCF).
Aggressive biddingThe Pune-based company, that controls a little over 25 per cent stake in MCF, on Friday placed a final offer to acquire 26 per cent additional stake at an aggressive ₹93.60 a share (up nearly ₹30 a share from its initial offer of ₹63 a share).
Deepak Fertilisers’ offer is nearly ₹12 a share higher than the final offer from rival Saroj Poddar’s Zuari Fertilisers and Chemicals, which is acting in concert with Mallya’s UB Group.
Zuari, holding over 16.43 per cent stake in MCF, upped its offer from ₹68.55 a share to ₹81.60 a share. The UB group has 21.97 per cent controlling stake, a part of which is pledged with the lenders.
MCF stock hits ceilingDeepak’s offer came as a surprise to the market where the MCF stock closed at ₹73.45 a share on Thursday. The MCF counter opened on Friday at ₹86 a share and soon hit the circuit breaker at ₹88.10, up by 19.95 per cent.
However, after initial flutter, Deepak Fertilisers scrip closed the trading session at ₹159.25, a rise of 35 paise.
Deepak Fertilisers is banking on 36 per cent shares held by the public (excluding Zuari) to gain a clear majority of over 50 per cent in MCF. There is not much scope of entering into many bulk deals as only Karnataka State Cooperative Marketing Federation (2.28 per cent) has more than 1 per cent shareholding in MCF.
The Mehta camp has already spent ₹186 crore in the first phase of acquisition. The additional 26 per cent will cost ₹288 crore. The total thus works out at ₹474 crore at an estimated price of ₹78 a share.
“We feel that this is a fair representation of the value of MCF, considering its synergies with our business in terms of product portfolio and geographic spread, its infrastructure facilities and the potential for further growth. We see value creation opportunities over the medium- to long-term,” Somnath Patil, President and CFO of Deepak Fertilisers is quoted as saying in a press statement.
Investors gainThe acquisition bid has surely brought major gains for investors in MCF. A back-of-the-envelope calculation shows someone who remained invested in the company since March 2013 (a month before Zuari started acquiring shares from the market in April 2013) may earn nearly 3.5 times the initial investments (at ₹27 a share) by participating in the open offer.
By this calculation, Poddar may profit approximately ₹64 crore on his investments of nearly ₹95 crore in MCF, at less than ₹50 a share.
The value of the promoter’s stake now stands at approximately ₹250 crore.
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