In last lap of race for Fortis, only two suitors remain
TWOHORSE RACE IHH, TPGManipal place binding offers for hospital operator NEWDELHI:
The acquisition of Fortis Healthcare Ltd has become a two-horse race with Malaysia’s IHH Healthcare Bhd and TPGbacked Manipal Health Enterprises Pvt. Ltd placing binding offers for the controversy-hit hospital operator.
The companies submitted their binding offers before the Tuesday deadline.
While IHH, in a Malaysian stock exchange filing, said that it has submitted an offer to buy the Gurugram-based firm, a person with direct knowledge of the matter said that TPG-Manipal, which agreed to pay ₹180 per share earlier, may have lowered its bid. The person declined to be named.
This does not automatically give IHH an advantage over TPG-Manipal as the winner will be judged on several parameters set by the newly constituted Fortis board.
According to the new conditions, the buyer will have to make a minimum investment of ₹1,500 crore in Fortis Healthcare by way of preferential allotments, apart from having a plan for funding the acquisition of RHT Health Trust and one for providing exit to PE investors. The bidders will also have to disclose their source of funding.
To be sure, TPG-Manipal does not have the right to match a higher rival bid like it had in the earlier bidding round that was scrapped.
“The board of directors of the company have received binding bids on July 3, 2018. The binding bids will be evaluated by the board of directors of the company in consultation with its advisors,” Fortis said in a regulatory filing.
A second person said on condition of anonymity that binding offers are expected to be opened by the board in consultation with its advisers later this week.
IHH, Asia’s largest healthcare company, on Tuesday told Malaysian stock exchanges that it has submitted a binding offer for Fortis which “supersedes” and “replaces” the “Enhanced Revised Proposal”.
IHH’s offer is valid until 5pm on July 16. The company did not disclose details of the fresh offer.
Earlier, IHH had planned to put in as much as ₹7,400 crore for over 50% in Fortis at ₹175 per share, while Manipal-TPG had earlier proposed to infuse ₹2,100 crore through a preferential allotment at ₹180 a share, which would allow it to own 18.4% in Fortis at a valuation of ₹9,403 crore.
It also planned to buy out SRL’s PE investors for ₹1,113.4 crore.
Among the parties who had placed bids in the earlier round but skipped this time are family offices of Sunil Munjal and Anand Burman; and KKRbacked Radiant Healthcare. Mint on Tuesday reported that aggressive bids for Fortis Healthcare were unlikely after new revelations about financial impropriety and changing regulatory scenario in Delhi.
The subdued interest in bidding this time reflects heightened uncertainty faced by the cash-strapped hospital operator since the Fortis board scrapped an earlier takeover attempt after a prolonged bidding process in which as many as five offers were considered.
Fortis initiated a fresh bidding process in May after a group of minority stakeholders objected to the bidding process.
The new board was reconstituted on May 22, with Fortis Healthcare shareholders approving a resolution to appoint three new directors, and remove Brian Tempest from the board indicating that they were not happy with the sale process.