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Munjals-Burmans bid opted due to certainty, liquidity issues: Fortis

(Eds: Updating with more details)

Gurgaon, May 11 (PTI) Fortis Healthcare board today defended its choice to go with the Rs 1,800 crore bid from Munjals-Burmans combine even as IHH Healthcare and Manipal-TPG combine questioned the decision saying their respective offers were more compelling for the shareholders.

The majority of the healthcare chains board opted for the Munjals-Burmans offer keeping in mind the certainty and liquidity issues, company director Brian W Tempest said.

The boards decision, however, did not go down well with investors with the companys shares tanking nearly 3 per cent on the bourses. Fortis Healthcare stock declined 2.66 per cent to close at Rs 148.40 on BSE. Intra-day, it slumped 4.39 per cent to Rs 145.75.

Earlier in the day, addressing media, Tempest justified the boards decision to go with the offer from Munjals-Burmans combine which had put their hat in the ring after Fortis board had approved an offer from Manipal-TPG combine on March 28.

"We looked at all the binding bids from the point of view of certainty and liquidity for the company...We took advice from the expert committee, from two financial organisations and from a legal organisation," Tempest told reporters here.

When asked if the decision was unanimous, he said three members of the board, who have been with Fortis, voted for the Munjals-Burmans bid and out of five new members two voted for the bid and three voted for other options.

Another major reason for accepting the bid was that "they have several investments in the healthcare sector".

Accepting the offer was a culmination of a process which started two years ago, Tempest said, adding that it would now be presented to shareholders for approval.

"There will be a shareholders meeting on this within 30 days and I am positive that there will be a support from the shareholders for the decision," he said.

Hero Enterprises Chairman Sunil Kant Munjal told PTI that the Burmans-Munjals combine were hoping that their offer would be seen "as beneficial by the shareholders as much as it has been seen by the company and the board now".

"...everybody saw that it was binding with no walk away position for us. It would be the be quickest to implement and has the certainty of implementation," he said.

Munjal further said already efforts have been made to reach out to Fortis shareholders and the response has been quite encouraging.

"In the next few days, we will reach out to more and see what their views are...Some of them have been very very vocal and we would also like to have a conversation with them," he added.

Meanwhile, having lost out to Munjals-Burmans combine, Malyasias IHH Healthcare said it is looking to speak to the shareholders of Fortis even as it evaluates options for its future course of action.

"We are currently evaluating all possible options, to ensure shareholders have the opportunity to realise this value. We are evaluating all possible options, and are looking to speak to shareholders to hear their thoughts," IHH Healthcare Managing Director and CEO Tan See Leng said.

Asserting that IHHs offer was "holistic and compelling", he said it "comprehensively addresses the short-term financing needs and long-term objectives".

Another suitor Manipal-TPG consortium, which also lost out, also expressed disappointment over the decision of the Fortis stating it would be for the shareholders now to decide to accept the recommendation or not.

"Manipal remains of the view that our offer proposed the most appropriate short and long-term plan for Fortis and was in the interests of all stakeholders, including shareholders," Manipal Education and Medical Group MD and CEO Ranjan Pai said in a statement.

The consortiums offer comprised a significant and necessary immediate investment, a clear strategic plan to fundamentally transform Fortis, as well as synergies from a combination with Manipal, he added.

On the issue of erstwhile promoters Malvinder Singh and Shivinder Singh continuing on the board of Fortis diagnostics arm SRL, Tempest said they have been asked to step down.

Fortis announced last night that its board has picked the offer from Munjals-Burmans combine over four other suitors who made binding offers.

The board decided, by majority, to recommend shareholders to approve the revised offer of Hero Enterprise Investment Office and Burman Family Office made on May 1 for an upfront equity infusion of Rs 800 crore at a price of Rs 167 per share through preferential allotment.

The Munjals-Burmans combine further agreed to invest another Rs 1,000 crore via preferential issue of warrants priced at Rs 176 per share.

Malaysias IHH Healthcare, Manipal-TPG combine and KKR-backed Radiant Life Care had also put in binding bids for Fortis.

The fifth bidder, Fosun Health Holdings, an arm of Fosun International, which made a non-binding proposal to invest a total of USD 350 million (over Rs 2,295 crore) at a price up to Rs 156 per share, did not revise its offer. PTI MSS AKT RKL MKJ MKJ