IHH, Radiant Life submit revised bids for Fortis

Revised offers for Fortis Healthcare have continued to pour in ahead of the latter’s board meeting on Thursday. Given that the Fortis board will consider only binding bids, Malaysian hospital chain IHH Healthcare Berhad and Radiant Life Care on Tuesday revised its offer for the beleaguered hospital and diagnostics chain.

Revised offers for Fortis Healthcare have continued to pour in ahead of the hospital chain operator’s board meeting on Thursday.

Given the Fortis board will consider only binding bids, Malaysian hospital chain IHH Healthcare Berhad and KKRbacked Radiant Life Care on Tuesday revised their offers for the beleaguered firm.

In its revised proposal, IHH submitted a binding offer to infuse ~6.5 billion, valuing Fortis at ~160 per share. IHH said that according to its assessment, Fortis would need an equity infusion of around ~40 billion for working capital and buying the asset portfolio of RHT Health Trust. IHH plans to invest another ~33.5 billion in Fortis through preferential allotment of shares and submitted a non-binding offer for the second larger tranche. The investment will be carried out on equity valuation of ~160 per share. IHH aims to complete due diligence within three weeks.

IHH has also sought the right to appoint two directors to the Fortis board. In its letter to Fortis, the Malaysian hospital chain said the revised proposal had to be accepted in its entirety, and not in parts. This is the second revision to the IHH offer.

Radiant Life Care submitted a binding offer to acquire Fortis hospital in Mumbai's Mulund area for enterprise valuation of ~12 billion. This would help it get immediate liquidity, Radiant said. It has proposed spin off of the diagnostic business and has made a non-binding offer to acquire only the hospital business of Fortis at a valuation of ~126 per share. Radiant Life Care has proposed a rights issue to fund the acquisition of assets from RHT. With the revised offer, IHH and Radiant Life Care join Manipal Hospitals and Hero Enterprise-Burmans, which have submitted binding bids for Fortis Healthcare. Apart from four binding offers, Fortis has also received non-binding offers from Fosun. IHH, which had sent a non-binding offer, revised it to a binding one (at least partly) on Tuesday. An advisory panel headed by Deepak Kapoor, former chief executive officer of PwC India, will meet on Wednesday and examine the offers before they are taken up for approval the next day.

The Fortis board's decision to only accept binding offers has led to displeasure among some potential investors and shareholder advisory firms. Proxy advisory firm Institutional Investor Advisory Services (IiAS) said, “True price discovery will occur only if more bidders are allowed to compete.”