Fortis Healthcare Ltd has warmed up to approaches from the same set of four suitors, barring China’s Fosun International whose rebidding information is not available, officially plunging India’s second-largest hospital chain into a fresh takeover battle.
Separately, Fortis has appointed former Ranbaxy Laboratories executive Ravi Rajagopal as new chairman of its board, which has witnessed an upheaval. He was associated with Ranbaxy, set up by Fortis founders Malvinder Mohan Singh and Shivinder Mohan Singh, as head of finance and commercial between 1995 and 1996, The Economic Times reported. Currently, Rajagopal is chairman at JM Financial Services Singapore.
In a stock market disclosure, Fortis said the board has decided to choose four parties for the re-bidding process: a consortium of Hero Enterprise Investment Office and Burman Family Office, Malaysia’s IHH Healthcare Berhad, KKR-backed Radiant Life Care Pvt Ltd, and TPG-backed Manipal Health Enterprises Pvt. Ltd.
The company had received interests from various parties on Thursday, which was the last day to submit the initial bids, added Fortis, without elaborating further.
The first takeover process, which witnessed aggressive bidding by the four parties, had to be cancelled in the wake of the dramatic board upheaval and lack of unanimity among shareholders over the winning consortium of Hero Enterprise Investment Office and Burman Family Office.
So on Tuesday, Fortis decided to initiate a fresh process altogether. The bids by Munjal-Burman, TPG-backed Manipal and IHH Healthcare were automatically invited based on their suitability earlier, Fortis had said earlier this week.
The four selected parties will now have to submit binding bids on 14 June, it had said.
The shortlisted bidders will be provided 10 days for financial and legal due diligence and will interact with the management and advisers who have conducted vendor due diligence (VDD) for the company.
Hence, they will get access to the online data room comprising of financial statements including unaudited balance sheet of the latest financial year through 31 March 2018, the status of major litigations and investigations against the company, and financial VDD reports of its diagnostics chain SRL and the company itself, among others.
Fortis board’s new chairman
In a separate filing, Fortis said that it has appointed Ravi Rajagopal, currently a non-executive independent director, as chairman on the Fortis board.
He is chairman at JM Financial Services Singapore and an independent director and chairman of the audit committee for Vedanta Resources Plc. He was formerly global head of business development of Diageo Plc. from July 2010 until 2015.
His appointment comes after board upheaval.
Shareholders last week voted to remove Brian Tempest from the board, who was one of four directors appointed to the board by the Singh brothers. The other three had quit even before the shareholders’ meeting took place to decide their fates.
Investors Jupiter India Fund and East Bridge Capital had demanded that the four directors quit the board because, by selecting the Hero-Burman bid, they had failed to work in the interest of the company’s shareholders.
The board now has only four directors. While voting out Tempest, Fortis shareholders also approved the appointment of three new directors — Rajagopal, Suvalaxmi Chakraborty, and Indrajit Banerjee – whose names were recommended by the activist investors. The fourth remaining board member is Rohit Bhasin.
Fortis had been looking for buyers for more than a year but legal cases against its founders, brothers Malvinder Singh and Shivinder Singh, deterred potential investors. However, suitors began eyeing Fortis when the siblings lost control of the company in early March after lenders seized the shares they had pledged to take on loans.
In late March, Fortis agreed to sell its hospital business to TPG-Manipal.
But the decision led to an outcry from some minority shareholders on concerns the TPG-Manipal offer undervalued Fortis. This opened the door for other suitors to bid for the company.