MUNJAL-BURMAN, IHH SWEETEN FORTIS OFFERS
The Hero Enterprise-Burman family combine and Malaysia’s IHH Healthcare sweetened their offers on the last day for revising bids for assets of Fortis Healthcare. IHH submitted a revised offer valuing Fortis at ~175 per share, up from its earlier offer of ~160 per share. Munjal of Hero Enterprise, together with Anand and Mohit Burman, also submitted a revised binding investment proposal to invest ~18 billion directly to Fortis without due diligence. SOHINI DAS & ANEESH PHADNIS write
The Hero Enterprise-Burman family combine and Malaysia’s IHH Healthcare both sweetened their offers on the last day for revising bids for assets of Fortis Healthcare.
IHH submitted a revised offer valuing Fortis at ~175 per share, up from its earlier offer of ~160 per share. Sunil Kant Munjal of Hero Enterprise together with Anand and Mohit Burman also submitted a revised binding investment proposal to invest ~18 billion directly into Fortis without due diligence.
IHH’s latest proposal includes an immediate equity infusion at ~175 per share and a subsequent equity infusion at a price not exceeding ~175 per share. IHH has, however, said this subsequent equity infusion will be subject to a satisfactory completion of due diligence.
On April 24, IHH had tweaked an earlier bid and offered to immediately infuse ~6.5 billion as a binding offer. It had also proposed to subsequently invest up to ~33.5 billion under a non-binding offer, subject to due diligence.
The Hero Enterprise-Burman Family Office combine has also revised the validity of its offer till May 15 and has now sought three board seats instead of two sought earlier. It is clear the Munjal-Burman combine wants to have a decisive say in the running of Fortis and its diagnostic arm SRL.
In its revised offer letter, the Munjal-Burman combine proposed an upfront infusion of ~10.5 billion into Fortis. The remaining investment of ~7.5 billion will be over the next four months. The offer letter also proposed a strategic sale of the SRL diagnostics unit after divesting Fortis’ stake in it.
“This proposed offer is a comprehensive solution to address the company’s needs, including the balance funding required for the Religare Healthcare Trust transaction and an action strategy and achievable plan for the company’s SRL business. We believe that there is every reason for our investment proposal to be put forward to the shareholders for their urgent consideration,” Munjal said.
The Munjal-Burman combine’s earlier offer was for a direct infusion of ~15 billion.
In its revised offer, of the proposed ~18 billion investment, ~8 billion will be through preferential issue of equity shares and the balance through preferential issue of warrants, based on Fortis’ current business and financial position. “Hence, including the warrant subscription amount, our upfront investment in the company will be ~10.5 billion,” the offer letter stated.
The allotment and pricing of the preferential issue of equity shares will be ~167 per share (or according to Sebi’s ICDR guidelines, whichever is higher), while that for the warrants will be ~176 per share.
Bidding for Fortis closes on Tuesday. The TPG-backedManipal Hospitals will have a chance to revise its offer till May 6, based on the bids received on May 1. This is according to “obligations” towards Manipal-TPG consortium, Fortis has said.
The Fortis board will meet on May 10 to select an investor and the deadline for submitting bids has been extended to May 1.
Objecting to the board’s decision to extend the timeline for submitting bids till May 1, Hero Enterprise had sought a level playing field for all the bidders.
“We are a bit surprised as we had assumed that the final bids were submitted and the process now was only to review and choose the best offer. We strongly believe that there should be equal opportunity provided to all bidders without any unfair advantage to any one party,” Munjal had said a few days ago.