After a protracted battle for control of the company, Mangalore Chemicals & Fertilizers ( MCF) today said that Vijay Mallya had resigned from the board of directors of the company with immediate effect. Mallya, whose UB Group is going through choppy times following a debt crisis at grounded airliner Kingfisher, was facing a tough battle to retain control of MCF after rival Deepak Fertilizers had initiated a hostile takeover of the firm.
The company informed the Bombay Stock Exchange of this development and didn't give any reason for the resignation.
The battle for the takeover bid of MCFL has been going onfor about a year and Mallya's resignation comes a month after two competing open offers for the shares of Mangalore Chemicals concluded unsuccessfully, with Deepak Fertilisers and Petrochemicals Corp managing to raise stake to around 32% in the company.
Following the announcement of Mallya resigning from the board, the company stock shot up 15 percent at Rs 94 while the BSE Sensex was flat.Shares in rival Deepak Fertilizers rose 1.6 percent following the news. Mallya's UB Group has already witnessed foreign firms Diageo and Heineken become the largest shareholders in its marquee firms United Spirits and United Breweries.
In April 2013, Zuari Fertilisers had bought about 10 percent stake in the MCFL from SBI group entities and openmarket, followed by Deepak Fertilisers acquisition of 24.46per cent stake in the UB group company in July.
Zuari group increased its stake in MCFL to 16.43percent during July 2013, in two-three rounds.Zuari, Deepak and MCFL compete in the fertiliserbusiness.
Vijay Mallya's UB Group then joined hands with the Zuari group to ward off a hostiletakeover bid by Deepak Fertilisers for Mangalore Chemicals andFertilizers (MCFL) and offered to buy more shares in the firmat a 9 percent higher rate than their rival.
Post the open offer last month, Deepak Fertilisers has 31.25 percent stake in the company whereas Rival Zuari-UB group combine, which had offered the counter bid at Rs 81.60 per share, could acquire only 48,000 shares and presently holds 38.4 percent stake in MCFL.
Zuari group along with Vijay Mallaya's UB group needs about 12 percent additional stake in MCFL to take control of the company while at the same time Deepak Fertilisers would require more than 18 percent stake in the MCFL. Both open offers were started on October 1 and closed on October 20.
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Updated Date: Dec 01, 2014 13:45:11 IST