Shares of IHH Healthcare and Fortis Healthcare rose on Monday after India's market regulator cleared IHH's mandatory takeover offer for an additional 26% stake in Fortis and its unit Malar Hospitals, potentially lifting its holding to about 57%.
IHH rose 3.1% to 8.38 ringgit ($1.99) on the Malaysian stock exchange, while Fortis surged 6.7% to 1,045.95 rupees.
The gains outpaced domestic benchmarks, with IHH beating Malaysia's FBM KLCI, which was slightly higher, while Fortis outperformed India's Nifty 50 index, which edged up 0.7%.
The approval revives a deal stalled since 2018 by litigation, but analysts warn the wide gap between Fortis' current price and IHH's original offer of 170 rupees could limit shareholder acceptance.
IHH first announced the deal in July 2018, subscribing to a preferential allotment of Fortis shares at 170 apiece for 40 billion rupees, giving it a 31.1% stake. Under Indian takeover rules, this triggered a mandatory open offer for an additional 26% stake worth about 33 billion rupees.
"We remain cautious on the near-term financial implications, as the MTO (mandatory takeover offer) is still pending and subject to shareholder acceptance," Nursuhaiza Hashim, equity analyst at BIMB Securities Research, wrote in a note on Monday.
The Kuala Lumpur-based stockbroking firm downgraded IHH to a hold rating, saying the share price has rallied near its target of 8.50 ringgit per share, leaving limited near-term upside.
IHH, one of the world's largest private healthcare groups, operates more than 80 hospitals across 10 countries including Malaysia, Singapore, Türkiye and India, its website showed.
Fortis runs 33 healthcare facilities with over 5,700 beds across 11 Indian states, according to its websites.
