HEALTHY ADDITION
India healthcare group accepts Khazanah unit’s RM2.35b offer for 31.1pc stake
IHH Healthcare Bhd has been chosen to acquire a controlling 31.1 per cent stake in India’s Fortis Healthcare Ltd for RM2.35 billion. The Khazanah Nasional Bhd unit now expects 23.7 per cent growth in revenue post-acquisition of Fortis to RM13.99 billion per annum.
INDIA’S Fortis Healthcare Ltd has accepted a RM2.35 billion offer for a controlling 31.1 per cent stake from IHH Healthcare Bhd. The offer values Fortis at RM5.2 billion and caps a monthslong bidding war for control of the company that drew interest from domestic and international suitors. The other bidder for Fortis was reportedly the consortium of Manipal Hospitals and TPG.
IHH, a unit of Khazanah Nasional Bhd, will hold a minimum 31.1 and maximum of 57.1 per cent stake in Fortis upon completion of the acquisition.
The 57.1 per cent shareholding would also trigger a mandatory tender offer to buy a 26 per cent stake, or 4.89 million shares, in Fortis’ listed subsidiary Fortis Malar Hospital Ltd, said IHH in a statement yesterday.
At a teleconference yesterday, IHH managing director and chief executive officer Dr Tan See Leng said post-acquisition, the group expected 23.7 per cent growth in revenue to RM13.99 billion per year, from RM11.31 billion.
Dr Tan said this would represent growth in earnings before interest, taxes, depreciation and amortisation of 16.5 per cent to RM2.71 billion from RM2.32 billion previously.
“Upon IHH shareholders’ approval, we expect the acquisition to be completed by the fourth quarter of this year, and the first contribution from Fortis to come in the first quarter of 2019.
“Post-acquisition, we expect our exposure to India, in terms of revenue, to significantly grow to 24 per cent from six per cent currently,” he said.
Dr Tan said the acquisition would significantly expand IHH’s presence in India – its fourth home market and one of the most attractive countries globally for healthcare – through a controlling interest in the country’s second-largest hospital chain.
Fortis hospitals also had a strong presence in North India, which would complement IHH’s existing South India-focused portfolio and provide access to a leading platform with pan-India presence, he said.
“The acquisition offers IHH and Fortis significant synergy potential in management, administration and operations, leveraging IHH’s global private healthcare execution track record and expertise,” added Dr Tan.
IHH said the offer price represented 19.5 and 15.3 per cent premium to Fortis’ closing share price on Thursday and 60-day volume weighted average price, respectively.
Depending on the acceptance for the Fortis and Malar open offers, the total funding required for the transaction will be between RM2.35 billion and RM4.33 billion, which will be funded through existing cash reserves and debt facilities.
IHH shares closed 0.5 per cent, or three sen higher, to RM6 yesterday, with 5.44 million units traded.