The Competition Commission of Singapore (CCS), which had raised competition concerns over the proposed acquisition of diagnostics services provider RadLink-Asia Pte Ltd by IHH Healthcare from Indian healthcare major Fortis Healthcare Ltd, has now said it will lead to lessening of competition.
As a result, the proposed $109 million deal where Fortis was to divest the asset to IHH Healthcare, which is controlled by Malaysian sovereign wealth Khazanah, stands scrapped.
“Fortis will continue to explore alternative strategic opportunities related to RadLink,” the firm disclosed on Friday.
This delays completion of Fortis' new strategy to focus on India and as part of which it has been divesting healthcare assets in Southeast Asia and Australia.
In September 2014, Fortis Healthcare inked a deal to sell its entire holding in RadLink-Asia Pte Ltd and its subsidiaries to Medi-Rad Associates Ltd (Medi-Rad), an indirect wholly-owned subsidiary of IHH Healthcare Berhad, for S$137 million ($108.6 million).
RadLink is engaged in the provision of healthcare services including outpatient diagnostic and molecular imaging services in Singapore.
Parkway Holdings, another wholly owned subsidiary of Kuala Lumpur-based IHH Healthcare also supplies radiopharmaceuticals and provides radiology and imaging services.
During the phase-1 review, CCS concluded that the proposed deal significantly reduces the number of providers of radiology and imaging services and the number of suppliers of radiopharmaceuticals in Singapore, and therefore said last November that this requires further competition analysis.
This proposed deal would have marked another move by Fortis to disengage from its international expansion strategy, having previously sold assets in Hong Kong, Australia and Vietnam. Fortis had flipped its strategy of international expansion within one year of $665 million deal to buy assets owned by its promoters and now derives almost all revenues from India.
After buying some assets from its promoters in Asia Pacific, it became the first Indian healthcare firm to build a strong overseas business. However, it took a u-turn from its previous strategy of going international, by selling its largest overseas healthcare assets in Vietnam, Australia and Hong Kong. The firm is now focusing on India. It also went asset light by spinning out physical assets into a Singapore-listed entity.
Earlier in 2010, Fortis promoters had also locked themselves into a takeover battle with Khazanah for Singapore's Parkways. They had later pulled out from the battle and sold their own stake to Khazanah.
It was after this that it went about acquiring other firms in Southeast Asia and then lent its own public listed company Fortis to buy its privately held assets. Most of these overseas assets have now been divested.
Fortis scrip closed at Rs 154.45 a share, down over 5 per cent on the BSE in a weak Mumbai market on Friday.
The decision was disclosed after market hours.
Fortis is backed by IFC and Standard Chartered Private Equity.
(Edited by Joby Puthuparampil Johnson)