Pathology chain Metropolis Healthcare Ltd's biggest acquisition deal which it had announced earlier this year is headed for a collapse.
In a stock market disclosure over the weekend, Metropolis said that it can be assumed that Hitech Diagnostic Centre Pvt Ltd does not intend to close the transaction to sell itself to the Mumbai listed company.
Metropolis is evaluating its rights, and the various routes available for their enforcement, and will accordingly take appropriate actions on this matter, it added.
In January, Metropolis had said it will purchase 100% equity of Hitech in a combination of a cash-and-stock deal.
The cash consideration was decided at Rs 511 crore (about $70 million).
The transaction as contemplated under the sales and purchase agreement (SPA) was initiated but has not been wholly consummated till date. Meanwhile, the statutory approvals obtained by the Metropolis under SEBI's regulations have also lapsed, it said.
Metropolis explained that it has been trying to conclude the transaction since April third week through various discussions and correspondences. It also issued a letter as recent as July 5 to which Hitech has not responded.
Ameera Shah, managing director, Metropolis, had said in January that the acquisition is in line with the company’s strategy to gain market share in the cities of Chennai and Bengaluru.
Hitech, which was founded in 1986 by SP Ganesan, has a network of 31 laboratories and 68 collection centres in the southern states of Tamil Nadu, Karnataka, Kerala, Andhra Pradesh and the Union territory of Puducherry.
An email sent to Hitech seeking comments on why it may not close the transaction did not elicit immediate response.
This will not be the first time that an acquisition deal will fall through for Metropolis.
Last year, Metropolis had agreed to acquire a 51% stake in Shraddha Diagnostic Centre (I) Pvt. Ltd for Rs 9.36 crore (about $1.2 million) in an all-cash deal. However, this deal albeit much smaller in size fell through.
Metropolis has been quite active in chasing assets, particularly in the western region where it has a significant presence.
In 2019, Metropolis acquired four labs to strengthen its presence in Surat, Gujarat, for a total of Rs 18 crore (about $2.45 million) in cash.
These labs were Doctor’s Clinical Laboratory, lyer Pathology Laboratory, Nagar Pathology Laboratory and Yash Clinical Laboratory.
It had also acquired Gujarat-based Sanjeevani Pathology Laboratory in 2017 to strengthen its presence in the western region.
The deal with Hitech would not only have been the biggest for Metropolis but one of the rare sizeable inorganic transactions in the diagnostics space in India.
Last month, the diagnostics landscape witnessed a major surprise as new age digital healthcare firm PharmEasy has signed a definitive agreement to acquire a majority stake in diagnostics firm Thyrocare Technologies for Rs 4,546 crore ($613 million).