Mangalore Chem gains 16% on open offer by Deepak Fert

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The Mangalore Chemicals & Fertilizers (MCF) scrip gained more than 16% intraday on Wednesday after Deepak Fertilizers announced an open offer to acquire

The Mangalore Chemicals & Fertilizers (MCF) scrip gained more than 16% intraday on Wednesday after Deepak Fertilizers announced an open offer to acquire a further 26% stake in the Vijay Mallya-promoted company for R190 crore.

SCM Soilfert, a wholly-owned subsidiary of Deepak Fertilizers, ordered a purchase of 20 lakh shares, or 1.7% stake, on Wednesday, triggering the open offer. As per Sebi's takeover code, the trigger threshold for an open offer is 25%. The offer price is at R61.75 a share, close to Tuesday's closing price of R61.95.

“We will study the offer, review our options and respond accordingly,” a UB Group spokesperson said on Wednesday. JM Financial Services has been appointed as the manager for the open offer.

Analysts believe the lenders of MCF would be more comfortable if Deepak Fertilizers gets controlling stake. “While Mangalore Chemicals has been a profit-making company, its working capital has been on the higher side due to subsidy delays by government. The interest costs for FY14 have been at R100 crore, nearly 50% of the Ebitda of R220 crore,” said Ravi Shenoy, AVP, midcaps research, Motilal Oswal Securities.

The MCF scrip ended 6.62% higher at R66.05 on the BSE. Deepak Fertilizers investors also gave a thumbs-up to the proposal. The scrip ended 4.07% higher at R125.15, touching 52-week high of R130.10 intraday.

Analysts said the move has the potential to triple Deepak Fertilizers fertilizer sales. “If Deepak Fertilizer’s open offer is successful, it will give it controlling stake of over R3,400 crore of fertiliser sales. This will almost triple the fertilizer segment sales for Deepak Fertilizers. Synergy benefits on distribution and contiguous markets make this bid for control more lucrative,” Shenoy said.

MCF has been the subject of a takeover battle between Zuari Agro Chemicals and Deepak Fertilizers. Zuari Agro Chemicals holds 16.43% in Mangalore Fertilizers through its wholly-owned subsidiary Zuari Fertilizers and Chemicals while Deepak Fertilizers holds 24.46% in the company through SCM Soilfert.

In July 2013, the Saroj Poddar-owned Deepak Fertilizers had acquired 2.89 crore shares, representing a 24.46% stake in MCF through an open market transaction, thus becoming the single largest shareholder and posing a takeover threat. At that time, the UB Group had maintained that there was no takeover battle for MCF and that the group wanted to retain control.

This article taken from Financial Express : http://www.financialexpress.com/news/mangalore-chem-gains-16-on-open-offer-by-deepak-fert/1243255
 

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