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Friday, July 13, 2018

With Change Of Hands, Fortis Hospitals To Get A New Name

Fortis Healthcare board Friday, approved Rs. 4,000-crore offer from Malaysia's IHH Healthcare for 31.1 per cent stake, valuing the cash-strapped firm at Rs. 8,880 crore and ending months of takeover battle.

IHH Healthcare, which is expected to gain majority control of India's second-largest hospital chain after a mandatory open offer for an additional 26 per cent stake, said in the long term it would rebrand Fortis hospitals into its own Gleneagles chain.

Commenting on the development, Fortis Healthcare Chairman Ravi Rajagopal said the IHH proposal offered a more strategically and financially compelling proposition along with simplicity and certainty.

"We are now putting Fortis on a path of survival, future growth and prosperity in partnership with IHH," he said over a conference call.

IHH Managing Director and CEO Tan See Leng said the company is willing to infuse more funds into Fortis if required.

Based on the offer price of Rs. 170 per share, the implied equity valuation for 100 per cent of Fortis Healthcare is Rs. 8,880 crore.

The fund infusion from IHH will address Fortis' liquidity requirements, including funding for RHT acquisition and for providing exit to private equity investors of diagnostics arm SRL.

IHH said its open offer for Fortis is expected to commence in August/September 2018, subject to regulatory approvals, including Competition Commission of India, Sebi and RBI, and close by third quarter of 2018. The open offer will cost another Rs. 3,300 crore.

IHH's offer is the third one that Fortis has approved this year.

Founders Malvinder and Shivinder Singh's loss of shareholding due to debt triggered the bidding war for cash-strapped Fortis. Also, there were allegations that they took funds from the company, a charge that the duo, who have since left the company, denied

he Fortis board had first accepted a merger offer from Indian firm Manipal Health Enterprises and US private equity firm TPG Capital. The bidding war, however, escalated with four other suitors throwing their hats in the ring.

Fortis then approved an investment of Rs. 1,800 crore investment offer from a consortium of Munjals-Burmans combine, which was not approved by shareholders, forcing it to re-open the bidding process.

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.

Three bidders (IHH, TPG-Manipal consortium, Hero-Burman consortium) were invited to participate and while Fortis received an expression of interest from Radiant-KKR consortium.

The diligence access and management interaction were offered to all the four bidders, Fortis said.
IHH Healthcare Berhad currently operates over 10,000 beds across 49 hospitals in 9 countries.

Fortis on the other hand has 45 healthcare facilities, including projects under development, in India, Dubai, Mauritius and Sri Lanka with approximately 10,000 potential beds and over 368 diagnostics centers

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