Jhunjhunwala said the the hospital chain should be sold through a fair process that allows all interested parties to bid
Billionaire investor Rakesh Jhunjhunwala questioned the 'sanctity' of recent merger deal struck between Fortis Healthcare and Manipal Hospitals and said the existing Fortis board is not fit to make the decision.
"What is the sanctity of a deal approved by a board of directors appointed by a group of shareholders who are no longer shareholders of the company?" The Economic Times reported quoting Jhunjhunwala on Wednesday.
Jhunjhunwala told the paper that the board doesn't have the power to do the deal. "I think the stage where the deal will need to be voted upon will not come at all," he added.
Jhunjhunwala said the the hospital chain should be sold through a fair process that allows all interested parties to bid.
Jhunjhunwala, who holds less than 1 percent stake in the company, said he is in touch with other minority shareholders.
The statement of Jhunjhunwala assumes prominence at a time when East Bridge Capital is trying to gather other minority investors to challenge the Fortis-Manipal Hospitals deal, as it feels the Fortis valuation is too low.
East Bridge Capital raised its stake to 9.73 percent. This gave the firm additional voting rights as well.
Fortis strongly disagreed with Jhunjhunwala's statement that the deal was not fair.
"The current approval of the board is an outcome of a process of due diligence for more than a year and has been approved as optimal and definitive deal in hand," the company said.
Fortis and Manipal have told Moneycontrol earlier that they are reaching out to investors and trying to explain them the rationale behind the deal and the valuation.
Fortis said it didn't receive any formal communication till date from minority shareholders with regard to the composition of the board that approved the deal.
The company said it will secure in-prinicple approval of shareholders through a postal-ballot with e-voting facility and not an extraordinary general meeting.
The process of printing notices, etc, is underway and the same is expected to be completed within a fortnight and the voting will start immediately thereafter, the company said.
Standard Chartered acted as the advisor for the deal and which according to Fortis has been in works for more than a year.
Last week, Fortis Healthcare's board had approved the demerger of its hospitals business, which will be acquired by Manipal Hospitals and TPG Capital, along with the sale of 20 percent stake in its diagnostics chain SRL, in a Rs 3,900-crore deal.