SINGHS CAN’T SELL FORTIS SHARES, SAYS APEX COURT
NEWDELHI: The Supreme Court on Thursday refused to give the Singh brothers (Malvinder and Shivinder, the original promoters of Ranbaxy and Fortis) permission to sell Fortis shares. It also refused permission to banks with whom the Singhs have pledged Fortis shares to do the same. Shares of Fortis fell 6.6% intra-day after the court order on Thursday, before closing at ₹146, down 5.1% on the BSE.
On August 11, the court had asked companies controlled by the Singhs to not sell shares in Fortis. The Singhs subsequently approached the apex court on August 23 asking for permission to sell shares in Fortis already pledged with the banks.
In Thursday’s order, the court restrained the Singhs from disposing off any of their assets (both encumbered and unencumbered) till the final disposal of the case on October 31. Encumbered assets are those pledged or offered as collateral to a lender.
The court’s August 11 order was in response to a plea by Daiichi Sankyo. That plea followed a June 21 order by the Delhi High Court that cleared the way for the Singh brothers to potentially sell a stake in Fortis Healthcare, on the condition that the disclosed value of their unencumbered assets remained unaffected.
Daiichi bought Ranbaxy Laboratories from the Singhs in 2008 for $4.6 billion. In 2014, it sold Ranbaxy to Sun Pharma for $3.2 billion. By then it had launched arbitration proceedings against the Singhs in Singapore, alleging that they withheld information on Ranbaxy (and its problems with the US Food and Drug Administration) at the time of the deal.
In 2016, the Singapore arbitration court ordered the Singhs to pay up ₹2,562 crore in damages to Daiichi. The total value of their dues after interest addition and legal fees came to ₹3,500 crore.
Since then, Daiichi and the Singhs have been locked in litigation over the enforcement of the Singapore court’s award.
The Japanese company has sought to block efforts by the Singhs to sell their stake in Fortis Helthcare Holding Ltd, held through holding companies RHC Holding Pvt. Ltd and Oscar Investments Ltd.
Fortis Healthcare Holding, in turn, owns around 37% of Fortis Healthcare Ltd (down from around 52% in June).
IHH Healthcare Bhd, Asia’s largest private hospital operator, is set to buy a controlling stake in Fortis Healthcare and SRL Diagnostics from Malvinder and Shivinder Mohan Singh in a deal that values the two firms around $2.9 billion, Mint reported in June, citing two people familiar with the matter. The deal is yet to close.