MCF fate hangs in balance: Should you bite at open offer?

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26 Aug, 2025 12:21

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Moneycontrol BureauThe fate of Vijay Mallya’s Mangalore Chemicals & Fertilizers (MCF) remains unclear in the wake of a tepid response to the open offers issued by both the UB Group-Zuari Agro combine as well as rival Deepak Fertilizers, which is attempting a hostile takeover of the firm.According to a report in the Times of India, the open offers initiated by both firms have met with a tepid response (4 percent for Deepak and 1-2 percent for Zuari), perhaps partially because of the fact shares in the firm had jumped sharply after the last round of takeover bids between the two firms. The open offer for both firms ends on October 17, effectively three trading days from now as October 15 is poised to remain a market holiday.After Deepak, which holds over 25 percent stake in MCF, declared an open offer in April to acquire an additional 26 percent in the firm for a price of Rs 61.75, promoter UB Group (which owns 22 percent) teamed up with Zuari (which holds about 16 percent) to launch a counter offer for Rs 68.Both firms later upped their takeover price, with Deepak’s latest price being Rs 93.6 while Zuari-UB have offered Rs 81.6 to acquire additional shares in the firm.However, MCF shares have rallied sharply in the recent past: from Rs 71 on September 25 to over Rs 100 six days later, in response to the takeover bids.The sharp rally would have likely been responsible for the tepid response to the open offer bids – as investors were getting a higher price than both offers in the market, apart the share-tendering process being less tax-efficient.However, over the past couple of trading sessions, MCF prices have seen a sharp cut, and are now trading around Rs 95. Any further price fall could trigger nervousness among traders who were hoping to play on the stock price on account of the open offer.A further Rs 5 fall in the stock price could trigger an arbitrage opportunity, brokers told Mint, making Deepak’s takeover attempt easier. But given the overall share price rally, some analysts are suggesting investors to use either the market price or the Deepak open offer to tender their shares.In a note to clients, Emkay analyst Rohan Gupta said investors should consider exiting MCF shares through either route and buy Deepak Fertilizer instead.“MCF’s offer price valuations are at about 100 percent premium to Deepak Fertilizers,” the note said.Gupta said that MCF shares may witness correction after closure of the open offer on October 17, and added that in the near term, the company’s earnings may also stay pressured, due to issues such as the recent closure in a urea plant as well as delayed government subsidies for fertilizers.The analyst further added that Deepak’s takeover of MCF would be synergistic and would be beneficial for the former in the long run.