Fortis climbs over 3% after IHH wins race

Desiree Burns
July 14, 2018

Fortis Healthcare advanced more than 3 per cent on Friday on reports that the hospital chain has approved binding investment offer from IHH for equity infusion of Rs 4,000 crore.

IHH will make a mandatory open offer to shareholders for 26 per cent of the outstanding shares post-issuance.

IHH Healthcare Bhd is poised to take control of cash-strapped Fortis Healthcare as it emerged the victor in a months-long bidding war for India's second-largest private hospital chain.

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

Last week, IHH Healthcare's Managing Director, Tan See Leng, told journalists in Malaysia that a successful bid for Fortis would be a springboard for IHH's plans in India and the acquisition would transform the company's entire India landscape. "We are putting in Rs 4,000 crore", he said in a separate conference call.

The bidding war for Fortis began earlier this year after its founders, brothers Malvinder and Shivinder Singh, lost their shareholding due to debt, and allegations that the Singhs had improperly taken funds from the company.

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"When asked about using the Fortis brand, which is now under litigation, he said", On the branding we have a global brand, Gleneagles which we are very happy to use in India as well. "The Board of Directors of Fortis Healthcare Limited (FHL) unanimously chose to recommend the binding investment proposal from IHH Healthcare Berhad (IHH) to invest Rs 4,000 crore by way of preferential allotment at a price per share of Rs 170", Fortis Healthcare said in its statement. "We will respect all the licenses and agreements that Fortis now has for the brands but in the long term and going ahead we would like to rebrand the Fortis hospitals to our own brand, Gleneagles". The funds raised will be used in completing the acquisition of hospital assets of RHT (a trust listed in Singapore). Also assisting were, on the open offer: partner Sudhir Bassi, senior associate Arpita Anand and associate Shashank Patil.

The transaction is subject to shareholder and Competition Commission of India (CCI) approval. It also provides an exit opportunity for shareholders through the open offer, in case they desire, Fortis said.

The world's largest healthcare group by market capitalisation, IHH Healthcare Berhad, has emerged as the victor in the race to acquire India's second largest healthcare network Fortis Healthcare Ltd (FHL) by outbidding the other contender, TPG-Manipal combine. The bidding war, however, escalated with four other suitors throwing their hats in the ring. The latest offer values FHL at around Rs 8,880 crore.

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.

IHH beat out three other players in the takeover battle: Hero Enterprise Investment Office and the Burman Family Office consortium, a consortium of Manipal Health Enterprises and the private equity firm TPG and KKR-backed Radiant Life Care. IHH operates hospitals in Kolkata, Hyderabad, Chennai, Bengaluru and Mumbai with more than 1,600 beds. Fortis is the second-largest healthcare chain in the country and has 45 healthcare facilities and 300 diagnostic centres under its belt.

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