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Deepak Fertilisers & Petrochemicals Corporation pounds MCFL with 10 lakh share buy

Sets stage for hostile takeover bid

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SCM Soilfert Ltd, a wholly owned subsidiary of Deepak Fertilisers & Petrochemicals Corporation, has acquired a little over 10 lakh shares of the Vijay Mallya-promoted Mangalore Chemicals and Fertilizers Ltd (MCFL) at Rs 62.50 each, taking the stake to 25.3% from 24.5% earlier, the company said in a filing to the stock exchanges on Thursday.

The move follows an unsolicited open offer launched by Deepak Fertilisers on Wednesday to buy 26% shares of MCFL at Rs 61.75 each, setting the stage for a hostile takeover. Deepak Fertilisers plans to further buy 308 lakh shares of MCFL.

Though Deepak Fertilisers was hoping to buy 20 lakh shares from the market, it could only manage 10 lakh shares. However, it crossed the threshold of 25% that triggers a mandatory open offer under the takeover rules of market regulator Securities and Exchange Board of India.

SSL had on Tuesday placed an order with JM Financial Services, a Mumbai-based broking firm, to buy up to 20 lakh shares of MCFL for a maximum price of Rs 63 each.

The fresh purchase accounts for 0.84% of share capital of MCFL. With this, SSL now holds 299.9 lakh equity shares amounting to 25.31% in MCFL.

Mallya, whose UB Group holds a 22% stake in MCFL, could lose management control of the company if Deepak Fertilisers manage to buy shares from the market.

On Wednesday, shares of Deepak Fertilisers ended 4.04% up at Rs 124.95 per share, while those of MCFL closed 6.45%, up at Rs 66.05 on the National Stock Exchange.

The Sebi takeover norms mandate a compulsory open offer for 26% stake on purchase of a 25% stake in a listed company. However, a voluntary open offer can be made any time.

Kolkata-based industrialist Saroj Poddar owns 16.43% of equity capital of Mangalore Chemicals through Zuari Fertilizers. As a white knight to stave off potential takeover bids, he had bought up a sizeable chunk of shares over the last one year.

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