Malaysia's IHH revises its offer, proposes to invest Rs 650 cr without due diligence in Fortis

The race for cash-strapped Fortis Healthcare is getting fiercer by the day. After China's Fosun Health Holdings, the latest to throw the ring in the hat is Malasia's IHH Healthcare, again. The company, after earlier making a non-binding offer to invest Rs 4,000 crore at Rs 160 per share, has now made a binding offer to immediately invest Rs 650 crore as part of its earlier proposal of the total infusion of Rs 4,000 crore. China's Fosun Health Holdings, TPG-Manipal combine, and Munjal-Burman family combine have also made their offers to buy Fortis. The latest revised offer gives the Fortis board one more option to look at when it meets on Thursday.

In a regulatory filing on Tuesday, Fortis Healtahcre said: "The Board of Directors of Fortis Healthcare has received an unsolicited binding offer from IHH Healthcare Berhand with a proposal to invest in the company. The company has received an improved offer from IHH to invest directly in the company."
In its proposal to Fortis, IHH has said it is committed to investing in the company. "Our revised proposal is based on our assessment that the company needs Rs 4,000 crore to meet immediate liquidity requirements for working capital and other near-term funding requirements."

The company has now made a binding proposal without any due diligence for an immediate injection of primary equity of Rs 650 crore by way of a preferential issue and allotment of equity shares at a price of Rs 160 per share, for which the IHH would be given immediate access to appoint two directors in the Fortis board.

The non-binding proposal to infuse up to Rs 3,500 crore through a subsequent preferential issue and the allotment of equity shares will be done after the satisfactory completion of the due diligence, said the company. It added that the due diligence will be completed in three weeks from the day it is granted access.

On April 18, Fortis had received an unsolicited non-binding expression of interest from China's Fosun Health Holdings, a wholly-owned subsidiary of Fosun International Limited, which proposed to infuse up to $350 million (around Rs 2,295 crore) at a share price of Rs 156 in the company.

Earlier, IHH had proposed to acquire Fortis Healthcare by offering to buy its shares at Rs 160 apiece, higher than Manipal's offer of Rs 155 per share that had valued the company at Rs 6,061 crore. Manipal Health had raised its offer from Rs 155 per share after the initial valuation of Rs 5,003 crore. Besides, Sunil Kant Munjal-led Hero Enterprise Investment Office and Burman Family Office had also offered to invest Rs 1,250 crore in Fortis at up to Rs 156 per share. On Monday, they also decided to extend the validity of their improved joint binding offer to invest Rs 1,500 crore at a valuation of Rs 161.6 per share in Fortis till May 4. Their revised offer is valid for five working days only.

Considering offers from different companies, the Fortis board had decided to form an expert panel last week to evaluate binding offers before it makes the final decision on April 26. The committee, headed by Deepak Kapoor, former chairman and CEO of Price Waterhouse Coopers, India, will act as an adviser to the board.