The Board of Directors of India’s Mangalore Chemicals and Fertilizers Ltd. (MCFL) and Paradeep Phosphates Ltd. (PPL) on Feb. 7 agreed to merge the two companies in a stock swap deal. MCFL shares jumped as much as 13.5% in early Mumbai trading, while PPL’s rose as high as 9.7%, the most in 17 months, according to Bloomberg.
“PPL and MCFL have consistently delivered robust financial performance and by combining forces they aim to amplify shareholder values,” PPL Managing Director and CEO Suresh Krishnan said in a call with analysts on Feb. 8. “The proposed entity shall become the largest integrated private (fertilizer) sector company in India with a total capacity of around 3.6 million mt/y.”
Krishnan added that PPL would be acquiring scale, a very efficient ammonia-urea asset, access to newer southern markets, the popular MCFL brand, ample room for backward integration, and a valuable port site at Mangalore that can house a new project in the medium-to-long term.
MCFL shareholders will receive 187 shares of PPL for every 100 shares held, according to Bloomberg, citing company filings. The deal is subject to regulatory approvals and the companies have formed a merger implementation committee to oversee the process.
Separately, as part of the deal, Zuari Agro Chemicals will sell its 33.08% stake in MCFL to Zuari Maroc Phosphates Pvt., PPL’s holding company, for 5.64 billion rupees at a price of 144 rupees per share.