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Fortis Chairman Ravi Rajagopal

IHH Healthcare bags Fortis, to purchase shares at premium

Sonali Thakur
After months of searching for an investor, Fortis Healthcare Ltd said on Friday that it has accepted an investment offer from Malaysia’s IHH Healthcare, capping a months-long bidding war for control of the firm that drew interest from domestic and international suitors.

Cash-strapped Fortis said IHH will invest Rs 4,000 crore at Rs 170 per share in the company that operates about 30 private hospitals in India, where the race to cash in on a private healthcare boom is heating up.

The offer is at a 19.5% premium to Fortis’ closing price on Thursday.

Recently, the company received two binding proposals from IHH and TPG-Manipal consortium but Munjals-Burmans combine, which had earlier become the preferred bidder, and Radiant Life Care had backed out.

The company said, the Malaysian firm will make a mandatory open offer to public shareholders for 26 per cent of the outstanding shares post issuance.

The "proposal provides for refinance of debt to the extent of Rs 2,500 crore", the company added.

Adding funds infused would be used towards completion of acquisition of assets of RHT, SRL private equity minority shareholders and short term liquidity needs.

According to the company, a mandatory open offer for public shareholders of Fortis Malar Hospitals would also be made at a price as determined under Regulation 8 of the SAST Regulations.

The company said, its Board considered merits of both the binding bids and took into account recommendation of its Financial Advisors (Standard Chartered Bank and Arpwood Capital) and the legal advice from Legal Advisors (Luthra & Luthra Law Offices and Cyril Amarchand Mangaldas), in approving IHH's offer.

Ravi Rajagopal, Chairman of Fortis Healthcare, said, "The IHH proposal offers a more strategically and financially compelling proposition along with simplicity and certainty."

Mr. Rajagopal added, the process was relaunched on May 29 and has been conducted in a fair, time-bound and transparent manner.

He said, the board looked forward to continuing the dialogue with our shareholders ahead of the EGM to approve the transaction.

Fortis said, “Its board chose the offer from IHH after considering all key parameters such as significant primary funds infusion at highest available bid price and sufficient funds commitment for future requirements”.

It said, the offer is at 20 per cent premium to current market price, the IHH proposal offers significant deal certainty given a simpler transaction structure and requirement for fewer approvals and a shorter timeframe.

It also provides an exit opportunity for shareholders through the open offer, in case they desire, Fortis said.

Fortis added, IHH's proposal also offers potential to achieve scale driven synergies on operational and financing front integrates Fortis into a large global healthcare platform with potential synergies.

The newly reconstituted board of Fortis had on May 29 initiated a fresh bidding process to meet FHL's long term and short term objectives.


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