IHH Healthcare sweetens takeover bid for Fortis yet again

Elias Hubbard
May 1, 2018

Cash-strapped Indian hospital operator Fortis Healthcare Ltd said today that two of its five suitors had boosted their bids to invest in the company as of a deadline for binding offers.

"The subsequent equity infusion shall be at a price not exceeding Rs 175 per share..."

Under their revised offer, the Munjals and Burmans proposed to invest Rs 800 crore through a preferential allotment of equity shares at Rs 167 per share.

IHH Healthcare will make an immediate equity infusion of Rs 175 per share, Fortis said in a stock market disclosure, referring to the revised proposal. Group entities of Hero Enterprise Investment Office led by Sunil Kant Munjal and the Burman family of the Dabur Group now hold around 3 per cent stake in the healthcare chain.

In exchange, the Munjal-Burman combine wanted three board seats. "For avoidance of doubt, this subsequent equity infusion will be subject to satisfactory completion of the due diligence and execution of mutually acceptable binding definitive documents", IHH said in its letter.

This is the second time that IHH has revised its offer for Fortis. The Munjal-Burmans raised their bid by 7.2 percent to Rs 172 per share, from Rs 160 earlier.

To fund the buyout of hospital assets under the Singapore-listed firm RHT, Munjal-Burmans proposed the sale of Fortis' diagnostic arm SRL. "We believe that there is every reason for our investment proposal to be put forward to the shareholders for their urgent consideration", Munjal said. They have also proposed an additional ₹1,000 crore through a preferential issue of warrants at ₹176 per share or as per SEBI ICDR guidelines, whichever is higher. "Hence, including the warrant subscription amount, our upfront investment in the company will be Rs 10.5 billion", the offer letter stated.

Yesterday, Fortis shares closed down about 1% at 152.40 rupees.

"In line with the obligations towards Manipal and TPG consortium, Manipal and TPG consortium will have the ability to provide a revised financial proposal till 12 noon on May 6, 2018 in relation to all binding bids received by the Company anytime till 12 noon on May 1, 2018", Fortis Healthcare had said in the regulatory filing. The expert advisory committee set up by FHL to evaluate the binding bids is now scheduled to share its recommendations with the board ahead of its May 10 meeting.

Objecting to the board's decision to extend the timeline for submitting bids till May 1, Hero Enterprises had sought a level playing field for all the bidders.

"We are a bit surprised as we had assumed that the final bids were submitted and the process now was only to review and choose the best offer".

Other reports by Click Lancashire

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