Acquisition of Fortis on hold
India’s top court halts IHH’s purchase of private hospital operator
KUALA LUMPUR: IHH Healthcare Bhd will have to wait to get its prized Fortis Healthcare of India after India’s Supreme Court ordered a halt to the acquisition following a petition filed by Japanese drugmaker Daiichi Sankyo.
India’s Supreme Court yesterday ordered the sale of Fortis Healthcare Ltd to IHH Healthcare for RM2.34bil to be put on hold.
IHH shares fell 20 sen to RM5.40 and it erased 3.11 points from the FBM KLCI. The decline in the share price was also linked to the weak key Asian markets.
Fortis’s share price fell to a low of 132.10 rupees (RM7.69) in early trade. At 5:15pm Malaysia time, it was down 11.45 rupees, or 7.55%, to 140.20 rupees.
Bloomberg reported a three-judge bench headed by Justice Ranjan Gogoi heard the petition filed by Daiichi Sankyo which alleged former promoters, brothers Malvdinder and Shivinder Singh, violated undertakings and court orders.
Daiichi sought a stay on the Fortis sale as the Singh brothers had not fulfilled their commitment to pay the drugmaker as per the Delhi High Court orders, one of Daiichi’s lawyers told Bloomberg.
IHH acquired a 31.1% stake in cash-strapped Fortis, which operates about 30 private hospitals in India, in July 2018 after an extended bidding war for control of the company.
It had subscribed to 235.294 million new Fortis shares at 170 rupees each or RM9.98 per share. This valued Fortis at RM5.214bil.
Daiichi’s lawyers argued in court that the Singh brothers created encumbrances on their shares even after the court order.
The petition came up for hearing first time yesterday.
The court issued notices to Fortis, Indiabulls Housing Finance Ltd, Singh brothers, and their holding companies on the Daiichi plea.
On July 13, the board of Fortis had approved the offer of IHH Healthcare ending months-long takeover battle as Fortis wrestled with investigations over financial irregularities.
The deal would see IHH Healthcare, one of Asia’s largest healthcare services company owning 31.1% of Fortis.
IHH Healthcare was caught up in a bidding war which kicked off earlier this year for cashstrapped Fortis after its founders, brothers Malvinder and Shivinder Singh, lost their shareholding due to debt and allegations of misappropriation of funds from the company.
A four-month takeover fight drew as many as five potential suitors from as far as the United States and China, all keen to win a prime position in of the world’s most under-served healthcare markets.