Mumbai : TPG Capital backed Manipal Hospital Enterprises Ltd late on Tuesday submitted a revised offer to acquire Fortis Healthcare Ltd, offering to infuse Rs750 crore upfront and a revised deal structure to mitigate the indebtedness at the firm. The duo have sweetened the offer further by offering a higher premium than before.
The new proposal comes against the backdrop of several last minute suitors making a beeline for the beleaguered healthcare firm.
To be sure, this is the third offer proposed by the Manipal-TPG combine.
The new bid submitted offers to mitigate immediate liquidity crunch by way of upfront cash infusion of Rs750 crore, similar to the offer made by Munjals and Burmans who have also submitted a joint bid for Fortis. The cash infusion will be subject to approval from Competition Commission of India (CCI) as well as Fortis board and shareholders .
The deal also offers a premium of Rs1,319 crore for hospital assets as against Rs1,058 crore proposed earlier, over and above the equity valuation of the business pegged at Rs5,003 crore .
The new structure, however, tweaks the transaction pertaining to SRL Diagnostics, a subsidiary of Fortis Healthcare. In its earlier offer submitted on 10 April, Manipal was to acquire 20% stake in SRL from private equity investors and subsequently conduct a rights issue to ensure greater shareholder participation post the acquisition. The new structure now proposes purchase of stake not only from PE investors but also acquisition of Fortis shares in SRL not amounting to more than 5% of the SRL’s paid up share capital. The proceeds from stake monetisation will be utilized for reducing indebtedness of the company.
Also, Manipal-TPG would control 51% of voting rights in SRL. The new deal, however, offer veto powers to Fortis shareholders in “certain key matters” pertaining to SRL.
Moreover, to ensure certainty of the transaction if approved by the board, Manipal-TPG duo have submitted a letter of intent from ICICI Bank. The lender has agreed to refinance the credit facilities availed by Fortis to the extent of Rs1,836 crore and also finance it’s capital expenditure and working capital requirements to the extent of Rs500 crore. Manipal has also stated its intent to launch an open offer post the demerger of hospital assets of Fortis.
Meanwhile, the advisory committee appointed by the Fortis board will be meeting Wednesday to discuss he evaluation criteria for the bids received. The board had received binding offers from IHH Bhd , KKR-backed Radiant Life Care and a combined bid from Sunil Munjal , Arvind Burman and Mohit Burman. The Fortis board has said that it will be considering only binding bids.