Fortis suitors look to buy shares from public and banks
MUMBAI: A bidding war is brewing for control of Fortis Healthcare Ltd, the hospital operator that has been without a defined promoter ever since the shareholding of founders Malvinder and Shivinder Singh dropped following the sale of their pledged shares by some lenders in February.
The TPG Capital-Manipal Health Enterprises combine and IHH Healthcare Bhd could acquire shares from the public and banks to wrest control of Fortis, two people directly aware of the ongoing negotiations said, requesting anonymity. Currently, 80% of Fortis’s shares are with the public while 20% of pledged promoters shares are held by lenders Yes Bank Ltd and Axis Bank Ltd.
The acquisition of Fortis’s stock in small quantities will strengthen their position if they have to make an open offer for the target company’s shares from the public. “In this scenario, it is possible that both TPG-Manipal and IHH may come up with competing open offers,” said one of the two people cited above.
Under current regulations, acquisition of a 26% stake in a listed company has to be followed by a mandatory open offer. Regulations also stipulate that in a creeping acquisition situation, an acquirer with a stake below the 26% threshold is obliged to make a mandatory open offer if he or she is granted any special rights by the company’s board.
“Both sides are currently engaged in talks with Yes Bank and Axis Bank who together hold 20% of the pledged promoters share in Fortis as this will be key to gaining control of the company,” said the first person cited above. “Yes Bank, which owns a 17% stake in Fortis, may seek a minimum 15% premium but the numbers can change,” the first person said. Yes Bank declined to comment, while an email sent to Axis Bank remained unanswered until press time.
For both TPG-Manipal and IHH, a potential buyout of Fortis is likely to close at a significantly lower price than what they were previously negotiating with the Singh brothers. Mint had reported in June last year that the Malaysian–Singaporean company, IHH Healthcare, was close to buying 26% in Fortis from Malvinder and Shivinder Singh at a $2.9 billion valuation for Fortis and unit SRL Diagnostics.