Slight roadbump for IHH from Fortis takeover
KUCHING: Analysts expect to see slightly negative impact for IHH Healthcare Bhd (IHH Healthcare) following India’s Supreme Court ordering status quo on the 4,000 crore rupiah (RM2.348 billion) sale of Fortis Healthcare Ltd to IHH last Friday.
According to Bloomberg, the ruling came in a case filed by Daiichi Sankyo Co Ltd as part of its effort to recover US$500 million from Fortis’ founders and exowners Malvinder and Shivinder Singh.
A status quo order may be issued by a judge to prevent any of the parties involved in a dispute from taking any action until the matter can be resolved, it said.
“As a result, our indirect whollyowned subsidiary, Northern TK Venture (NTK), will not be able to proceed with an open offer for Fortis until further orders, clarifications or directions are issued by either or both of the Indian Supreme Court and the Securities and Exchange Board of India,” IHH said in a filing with Bursa Malaysia yesterday.
However, IHH said the order did
As a result, our indirect wholly-owned subsidiary, Northern TK Venture (NTK), will not be able to proceed with an open offer for Fortis until further orders, clarifications or directions are issued by either or both of the Indian Supreme Court and the Securities and Exchange Board of India. Bloomberg
not impact the share subscription completed on Nov 13, which gave IHH a 31.1 per cent stake in Fortis through NTK.
Fortis was at the centre of a bidding war between IHH and three other bidders, including TPG- backed Manipal Health Entreprises Pvt Ltd, KKR-backed Radiant Life Care Pvt Ltd and the consortium of Hero Enterprise Investment Office and the Burman Family Office, after its creditors called for an open bid for its shares.
After IHH was announced as the winner of the bid in July this year, Japanese drugmaker Daiichi Sankyo Co had approached the Delhi High Court to block the sales.
Daiichi alleged that Fortis’s former promoters, brothers Malvinder Singh and Shivinder Singh, were in violation of their undertaking to the court that they had sufficient encumbered assets to satisfy an arbitration award given to it in relation to the Ranbaxy Laboratories Ltd acquisition in 2008, which involved them both.
Recall that IHH became the controlling shareholder of Fortis upon the completion of the acquisition of 31.1 per cent stake in Fortis last month.
This triggered a mandatory takeover offer (MTO) to acquire up to 26 per cent of the expanded capital from the existing shareholders of Fortis. The open offer was initially scheduled to commence on 18th December.
AmInvestment Bank Bhd (AmInvestment Bank) viewed this as slightly negative as the MTO is likely to be suspended, delaying the takeover process until the court comes to a decision.
“However, there will be minimal impact operationally as IHH remains a controlling stakeholder with management control, given that it currently has 4 board seats in
Fortis,” it said in a note yesterda.
“Fortis’ operations will still be consolidated as indirect subsidiaries of the company upon the completion of subscription of share capital in 4QFY18.”