Sebi seeks clarifications on rival bids for Mangalore Chemicals

The Securities and Exchange Board of India (Sebi) has sought clarifications from two rival bidders, Deepak Fertilisers and Zuari Fertilisers, who have sought to acquire additional stakes in Vijay Mallya-led UB Group's Mangalore Chemicals and Fertilisers Ltd (MCFL).

The market regulator has sought clarifications through merchant bankers of the two rival bidders as also the existing promoters of MCFL who allegedly joined Zuari Fertilisers as 'persons acting in concert'.

Sebi data shows it had sought clarifications from JM Financial, merchant banker for Deepak Fertiliser group on 20 June, while the regulator on 17 June sought additional details from ICICI Securities and Ambit Corporate Finance, merchant bankers for Zuari, on their proposed open offer for MCFL.

Sebi is awaiting reply from the merchant bankers for both the open offers, according to the latest update on 'processing status of draft offer documents' filed with the capital markets regulator as of 20 June.

An open offer for acquisition of additional stake above the 25 per cent trigger in a listed company can be exercised only after issuance of 'observations' by Sebi.

The battle for MCFL started in April last year when Zuari Fertilisers bought about 10 per cent in the company from SBI group entities in the open market. Deepak Fertilisers followed with acquisition of a 24.46 per cent stake in MCFL in July 2013. Zuari group then increased its stake to 16.43 per cent in the same month.

Zuari, Deepak Fertiliser and MCFL compete with each other in the fertiliser business, but a huge debt burden of the Mallya-led group had triggered a takeover battle for MCFL.

Earlier, in May this year, UB Group had joined hands with the Zuari group to ward off a hostile takeover bid by Deepak Fertilisers for MCFL and offered to buy more shares in the firm at a higher rate (9 per cent more) than the rival offer.

This counter offer came less than a month after Deepak Fertilisers raised its stake in the MCFL to 25.31 per cent and made an open offer to buy an additional 26 per cent at Rs63 per share, for a total of Rs194 crore.

Saroj Poddar-led Zuari group has teamed up with the UB Group in its offer to buy a 26 per cent stake for Rs68.55 apiece for a total of Rs211.22 crore in MCFL.

UB Group currently holds nearly 22 per cent stake in MCFL, but over half of their shareholding is pledged with lenders.

Sebi received the draft document of an open offer worth Rs190.28 crore by the Deepak Fertiliser group on 8 May. This was followed by draft document for an open offer worth Rs211.23 crore by Zuari group on 27 May.