Malaysia’s IHH alters Fortis bid

On a day when proxy advisory firm Institutional Investor Advisory Services (IiAS) warned the Fortis Healthcare board of an unprecedented class action suit in India, the Malaysian bidder IHH Healthcare Berhad made a revised proposal converting its earlier offer into a partly binding one.

The proxy firm had faulted the Fortis board for its decision to set up an advisory panel to vet the offers when minority shareholders had called for convening an extraordinary general body meeting.

They had sought the removal of four directors and inclusion of three new independent directors. The proxy firm also questioned the wisdom of the board, whose legitimacy itself is being disputed, in asking the panel to decide only on the binding offers. The expert panel is to give its recommendation by April 26. For better price discovery, all offers must be vetted, IiAS added.

Fortis has received five offers. The Manipal-TPG combine, Hero Enterprise Investment and the Burman Family Office combination, IHH Healthcare, China’s Fosun and KKR-backed Radiant Life Care Pvt. are currently in the race. IHH’s revised proposal reflects the intense competition among bidders.

‘Shares at ₹160 apiece’

The Malaysian firm has made a binding proposal without any due diligence for an immediate injection of primary equity of ₹650 crore into Fortis by way of a preferential issue and allotment of equity shares at a price of ₹160 a share.

However, it has added a rider. It has sought the right to appoint two directors on the board of Fortis. It also wants access to carry out due diligence and has sought upfront clarity on the immediate use of funds to be provided by the company.

The revised proposal retains the non-binding offer to infuse up to ₹3,350 crore (subsequent to the immediate equity infusion).