Malaysia's IHH Healthcare Berhad is set to take control of Fortis Healthcare after its bid of up to Rs 7,300 crore for a 57 per cent stake in the hospital chain was chosen over that of rival Manipal group. The Fortis board of directors picked up IHH offer to infuse Rs 4,000 crore by way of subscription to preferential shares, over rival TPG-Manipal consortium's offer that included Rs 2,100 crore infusion and merger of Manipal Hospitals with Fortis Healthcare.IHH will get a 31 per cent stake in Fortis Healthcare through the preferential allotment of shares at Rs 170 apiece and will then make an open offer for an additional 26 per cent at the same price. The open offer will cost another Rs 3,300 crore. The offer price is about 20 per cent higher than closing price of Fortis on Thursday.
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 transaction is expected to be completed within seven business days of receipt of shareholders' and CCI's approval, which will be obtained concurrently with shareholders' approval and can take approximately 60-75 days, Fortis Healthcare said in a statement.
IHH's offer will give it ownership of over 30 hospitals in the country amid a private healthcare boom. Fortis said it settled on IHH's "simpler" offer, which will allow the Indian firm to refinance up to Rs 2,500 crore of debt, and address its short-term liquidity needs.
IHH Managing Director and CEO Tan See Leng said the acquisition would significantly increase the company's reach across the Indian subcontinent.
Leng further said that "with a clear and holistic strategy in place, we have developed a 100-day turnaround plan to stabilise Fortis".
IHH said the 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 Q3 2018.
On a conference call with the media, Fortis Chairman Ravi Rajagopal said that he does not expect the company's current management structure to change after the IHH deal.
Indian regulators are looking into allegations that Fortis founders Malvinder and Shivinder Singh siphoned out funds from the company. However, the two founders, who have now left the company, deny any wrongdoing. But the company's assets are still considered attractive because of its chain of hospitals in key cities and rising private healthcare spending in the country.