Fortis board rebuffs takeover talks with highest bidder IHH Healthcare
Photo Credit: Reuters

Malaysia's IHH Healthcare Berhad, one of the three bidders in the race to buy Fortis Healthcare Ltd, said on Monday that the Indian firm had declined to take part in takeover talks.

IHH said in a stock market disclosure that Fortis had "indicated its inability" to engage with it, citing a binding agreement with Manipal Health Enterprises Pvt. Ltd and private equity firm TPG Capital.

The Malaysian company added that it had not entered into discussions, negotiations or transactions with Fortis thus far.

An email query sent to Fortis did not elicit a response till the time of publishing this report. However, the company announced later in the day that its board is expected to meet this week to look at all eligible options.

Fortis had last Friday received an unsolicited binding offer from IHH, which said it would offer Rs 160 per share subject to satisfactory completion of limited due diligence.

IHH’s offer had surpassed the revised bid of Rs 155 per share by TPG Capital-backed Manipal Hospital Enterprises Pvt. Ltd, and a Rs 156 per share joint offer by the Munjal family’s Hero Enterprise Investment Office and Dabur’s Burman Family Office.

IHH's proposal required Fortis to respond by April 18.

Fortis' refusal to engage with IHH puts Manipal-TPG in a strong position. It also represents the latest twist in the process for the sale of Fortis.

Fortis had last month announced that its board had approved the sale of its hospital business to private equity firm TPG Capital-backed Manipal Health.

Manipal had subsequently sweetened the offer amid reports of growing disappointment among Fortis shareholders over its offer with regard to valuations and a possible counter bid from IHH.

The revised offer valued Fortis’ hospital business at Rs 6,061 crore, or Rs 116 per share, up almost 21% from the previous offer. Manipal Hospital’s equity valuation remained at Rs 6,070 crore.

A merger between Manipal and Fortis has the potential to create India’s largest healthcare services provider by revenue, outranking Apollo Hospitals Enterprise Ltd.

Last year, IHH, which is majority owned by Malaysian sovereign wealth fund Khazanah Nasional Berhad, had sold its entire stake in Apollo Hospitals Enterprise Ltd.

In a surprise development last Thursday, Hero Enterprise Investment Office and the Burman Family Office had jointly proposed to invest Rs 1,250 crore in the company through a preferential allotment, subject to certain conditions.

The Fortis sale has been delayed due to the legal cases against its founders, brothers Malvinder and Shivinder Singh, who lost control of the healthcare firm after their stakes plunged to low single digits.

In February, the Singh brothers had resigned from the board and now own just 0.77% in Fortis, compared to the 25% stake they held at the end of December 2017, stock-exchange filings show.

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