Published: Mon, July 16, 2018
Medical | By Johnnie Horton

Malaysia's IHH Healthcare to acquire Fortis

Malaysia's IHH Healthcare to acquire Fortis

Manipal Health Enterprises Ltd, along with private equity firm TPG Capital, and KKR & Co-backed Radiant Life Care Pvt Ltd had also bid for stakes in Fortis.

"The Board of Directors of Fortis Healthcare unanimously chose to recommend the binding investment proposal from IHH Healthcare Berhad to invest Rs 4,000 crore by way of preferential allotment at a price per share of Rs 170", a company statement said here.

On June 29, Fortis Healthcare said that markets regulator Sebi has ordered a forensic audit in the matter of the company, which admitted to systemic lapses in giving Rs 494.14 crore loans to firms controlled by erstwhile promoters - Malvinder and Shivinder Singh.

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 (Rs 170 per share) and sufficient funds commitment for future requirements.

The Malaysian healthcare chain outbid the Manipal-TPG combine, which had offered Rs 2,100 crore at Rs 160 per share.

In a regulatory filing during a trading halt on Friday morning, Singapore-listed IHH said it could spend more than 73.5 billion Indian rupees (S$1.47 billion) to acquire a majority stake in Fortis Healthcare through a subscription and general offer.

"IHH is also supportive of Fortis Healthcare's announced plan to acquire RHT Health Trust, which is listed in Singapore and now has a portfolio of 12 clinical establishments, four greenfield clinical establishments and two operating hospitals", it added.

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The acquisition triggers an open offer by IHH to the public shareholders for at least 26% of Fortis for an amount of around Rs 3,300 crores and Fortis Malar Hospitals to give it full control of the company. IHH's offer price is about 15 per cent more than Friday's closing price.

The transaction is supposed to be completed within 7 business days of receiving of approvals from shareholders and CCI (Competition Commission of India).

Leng further said that "with a clear and holistic strategy in place, we have developed a 100-day turnaround plan to stabilise Fortis". The bid also provides for refinancing of debt up to Rs 2,500 crore.

"Funds infused will be used towards completion of the acquisition of assets of RHT, SRL private equity minority shareholders short-term liquidity needs", read Fortis Healthcare's statement.

Fortis had accepted in March a merger offer valued at 150 billion rupees from Manipal-TPG, but four other suitors soon threw their hats in the ring, escalating it into a rare bidding war.

Private healthcare spending in India is rising rapidly, making Fortis an attractive target, as the government aims to expand insurance to hundreds of millions of people in a country that lacks adequate health facilities.

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