Fortis Healthcare Ltd’s shareholders have voted by a thumping majority to oust ex-Ranbaxy CEO Brian Tempest as director, overriding promoters’ opposition to his removal.
Close to 88% of the shareholders voted for his removal, Fortis said in a stock market disclosure.
The shareholders have also approved the appointment of three new directors -- Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee – whose names were recommended by activist investors who had also called for the removal of Tempest and three other directors.
Tempest was appointed by Fortis founders, the brothers Malvinder Singh and Shivinder Singh, who lost control of the company in early March after lenders seized the shares the brothers had pledged to take loans.
He was former CEO of Ranbaxy Laboratories Ltd, the drugmaker that the Singh brothers sold to Japan’s Daiichi Sankyo in 2008. The Ranbaxy deal, however, came to haunt the Singh brothers after a Singapore tribunal found that they had allegedly concealed critical information during the sale.
Interestingly, Tempest was the only director who waited until the extraordinary general meeting on 22 May to let the shareholders decide his fate.
Three other independent directors -- Sabina Vaisoha and Lt. Gen. (retired) Tejinder Singh Shergill and non-executive director Harpal Singh -- had resigned, citing personal reasons, some days back. The three directors were also appointed by the Singh brothers.
Institutional shareholders of Fortis had demanded that the four directors quit the board. The Jupiter India Fund and East Bridge Capital had said that the directors had failed to work in the interest of the company’s shareholders while deciding the offers for selling the hospital chain.
The four directors had earlier sent a note to shareholders dismissing allegations of not satisfactorily exercising their duties.
In a separate filing, Fortis said that the stock exchange has sought clarification from the company with respect to a media report that the market regulator is probing alleged illegal insider trading at the hospital chain.
This fresh allegation is the latest twist in the takeover battle for Fortis that saw five heavyweight foreign and domestic investors fight it out for the hospital chain.
After a spate of bids and counter-bids, finally, on 10 May, the Fortis board chose an offer by a consortium of Hero Enterprise Investment Office and Burman Family Office to invest in Fortis.
However, the bidding war has failed to die down as TPG-backed Manipal Health again revised its offer for Fortis last week.
Manipal increased its offer to buy Fortis shares by 12.5% to Rs 180 apiece from its most recent offer of Rs 160 each.
Subsequently, IHH Healthcare extended the validity of its offer to invest in Fortis and said it would take part in any new bidding process the Indian company might start.
To add to the drama, Fortis’s single-largest shareholder, Yes Bank, urged the board to consider revised bids for the hospital chain (of Manipal Hospital Enterprises and IHH Healthcare) despite board acceptance of the Munjal-Burman offer, said a report in The Economic Times, citing people in the know.
Yes Bank, according to the report, also urged the board to consider inviting those that did not submit or revise their bids.