Zuari-Deepak war for MCFL draws a blank

KOLKATA: The high-profile battle between Saroj Poddar's Adventz and Deepak Fertilisers & Petrochemicals for taking control of Vijay Mallya's Mangalore Chemicals and Fertilizers (MCFL) has drawn a blank so far. Mallya holds 22% in MCFL and Adventz's Zuari has close to 17%.
Both Adventz's Zuari and Deepak Fertilisers groups came out with an open offer to gain control of the fertilizer firm.But now, with only four days left for the completion of the offer on October 17, none of them has bagged a significant number of shares through the offer.
A source close to the development said Deepak Fertilisers has got less than 4% while Zuari has got 1-2% only. Deepak Fertilisers came out with an open offer on April 23, 2014 for 26% stake at Rs 61.75 per share. Zuari, along with Vijay Mallya, gave a counter offer of Rs 68.55 apiece on May 13.
Both the groups subsequently revised the price.
The last offer price of Deepak is Rs 93.60 and Zuari Rs 81.60.
Minority shareholders have not responded much to the offer as the market price of the company (MCFL closed at Rs 95 on the BSE on Monday) was hovering at just above the open offer levels.
The joint holding of Mallya and Poddar would be nearly 40%. Deepak Fertilisers, through its arm SCM Solifert, holds 25%. So Poddar needs at least about 10% to gain control while Deepak Fertilisers needs another 25%. With only four days left, achieving that quantum would be a task, feel experts. Some of the leading broking firms have said the minority shareholders should look for an exit through the open offer as the price of MCFL may not sustain at the current level once the offers conclude on October 17. Broking firms like Emkay Global Financial Services and Ventura Securities feel this could be a lucrative exit opportunity for shareholders.
According to Emkay analysts, the current share price of MCFL at Rs 95 apiece, or the open offer price, is a lucrative exit opportunity for the shareholders of MCFL. "MCFL faces various issues - urea plant closure and significant delays in subsidy payment from the government - which will affect its near-term profitability. There will be no open offer for a year after October 17. So there will be pressure on the price," an Emkay analyst said.
According to analysts at the brokerage, MCFL reported revenues of Rs 3,300 crore ebitda of Rs 200 crore and a PAT of Rs 70 crore with an EPS of Rs 6 in FY14. The company's urea plant has faced plant closure effective October as the government stops giving subsidy to high-cost naphtha players.