IHH’s RM2.35b Fortis deal hits snag
But Indian hospital group’s chairman downplays threat to RM2.35b acquisition
KHAZANAH Nasional Bhd unit IHH Healthcare Bhd’s RM2.35 billion acquisition of India’s Fortis Healthcare has hit a snag, but Fortis chairman Ravi Rajagopal has indirectly downplayed any significant threat to the deal.
Nikkei Asian Review reported yesterday the deal was derailed by a court order prompted by Japanese drugmaker Daiichi Sankyo’s protest.
After a long bidding war, IHH announced last month Fortis had accepted its RM2.35 billion offer for a controlling 31.1 per cent stake in the hospital group.
The other bidder for Fortis was reportedly the consortium of Manipal Hospitals and TPG Capital.
IHH said last month it would buy a majority stake in Fortis through a combination of private placement and tender offer by the end of this year.
Nikkei said shortly after the announcement, Daiichi Sankyo had filed with the Delhi High Court to block the deal.
It said Malvinder and Shivinder Singh, who founded Fortis, had been ordered in January to pay 35 billion rupees (RM2 billion) in damages to Daiichi Sankyo over the sale of Ranbaxy Laboratories, a generic drugmaker.
The brothers were found to have withheld critical information from Daiichi Sankyo when they sold their stakes in Ranbaxy in 2008.
With the payment yet to be made, the Japanese company is protesting the Fortis sale.
The latest court order could delay the timeline of the acquisition, said Nikkei.
However, in an interview with ETPrime.com, Ravi said Fortis was not a party to any arbitration proceedings and was not even mentioned in any of the court rulings.
“Therefore, it did come as a surprise. We think the risk to Fortis is remote,” he was quoted as saying.
Ravi said some of the contentions that were made, including about not alienating the promoters’ holdings in Fortis, did not ring true.
“Under the Indian law, a legitimate transfer of shares — and in this case it was some banks that had pledged shares — cannot be ignored, and certainly at the time when there was no restraint order on us.
“So we do not see where it is going. It is unfortunate that this has came up, especially when we are trying to sort thing out, not just for the shareholders but also employees and patients,” he said.
Meanwhile, an IHH spokesman said the company had no comment at this time.
On Bursa Malaysia, IHH’s share price closed 26 sen, or 4.36 per cent, lower at RM5.70 yesterday.