Deepak Fertilisers & Petrochemicals Corporation (DFPC) with SCM Soilfert Ltd. has made an open offer to acquire a further 26 per cent stake in Mangalore Chemicals and Fertilisers (MCF).
DFPC and its wholly-owned subsidiary SCM Soilfert have made the offer to acquire up to 3,08,13,939 equity shares, constituting 26 per cent of the voting share capital of MCF.
The offer price is Rs.61.75 per share. On Wednesday, on the Bombay Stock Exchange (BSE), the MCF stock touched an intra-day high of Rs.72.35 before closing at Rs.66.05, up 6.62 per cent.
In its filing to the BSE, DFPC said it would spend up to Rs.190.27 crore to acquire the 26 per cent stake. It also said that it planned to place a purchase order with JM Financial Services to acquire up to 20 lakh shares of MCF at a price not exceeding Rs.63.
As of December 2013, SCM Soilfert was the largest shareholder with 24.46 per cent stake in MCF followed by Zuari Fertilizers with 16.43 per cent. The promoter group, including United Breweries Holdings, United Spirits, McDowell Holdings and Kingfisher Finvest India, held 21.98 per cent stake in MCF.
Analysts tracking the sector feel it is a good move for Deepak Fertilisers.
Ravi Shenoy Assistant Vice-President-Midcaps Research, Motilal Oswal Securities, said that if successful, the open offer would give DFPC a controlling stake over Rs.3,400 crore of fertiliser sales.
“This will almost triple fertilizer segment sales for Deepak Fertiliser. Synergy benefits on the distribution front and contiguous markets make this bid for control more lucrative.
“The financial incentive of being able to consolidate MCF’s financials is a small benefit for the Rs.190 crore it proposes to spend which is less than 50 per cent of its annual cash flows of Rs.400 crore,” he said.
