Manipal sweetens bid for Fortis

The consortium of Manipal Health Enterprises (MHEPL) and private equity firm TPG Asia has again revised the offer for Fortis Healthcare.

The consortium now proposed to infuse ₹2,100 crore into the company at ₹160 per share.

The combine also proposed to merge MHEPL with Fortis Healthcare, valuing the latter at ₹8,358 crore.

Earlier, the bidders had proposed a demerger of the hospital business of Fortis, which it valued at ₹6,322 crore as on April 24.

This business is to be subsequently merged with Manipal Hospitals, which has now been valued at ₹6,070 crore, according to a filing.

Manipal-TPG informed Fortis that it would infuse the ₹2,100 crore into FHL through preferential allotment. The proceeds, it said, would be used to repay existing loans, fund working capital requirements and partly finance the acquisition of relevant Indian entities from Religare Health Trust (RHT). To supervise the use of these proceeds, Manipal-TPG has sought the right to appoint “such number of non-executive directors pro rata to its shareholding after the preferential allotment (with a fractional number being rounded up to the nearest whole number) subject to the FHL board comprising a minimum of seven directors. This preferential allotment is subject to regulatory, shareholder and other relevant approvals.

Immediate liquidity

The preferential allotment, the consortium said, was being undertaken only to provide immediate liquidity to Fortis by way of a minority investment in the company.

“The preferential allotment and the ability to appoint directors as aforesaid, shall not vest control in the subscriber(s) and, accordingly, no open offer is required to be made,” said the consortium.

Manipal-TPG’s proposal to merge MHEPL into FHL values Fortis at ₹8,358 crore and MHEPL at ₹6,070 crore.

“A value of ₹8,358 crores for FHL shall translate into a per share value of ₹160 per equity share (being the same price per equity share as offered for the preferential allotment),” the consortium said.

To resolve obligation of Fortis to provide an exit to SRL PE investors, the combine proposed to purchase their stake subject to agreement with the PE investors.

As with their earlier offers, the consortium has proposed to purchase PE investors’ 30.93% stake in SRL, Fortis Healthcare’s (FHL) diagnostics arm, for ₹1,113.4 crore.

Post the acquisition of the PE SRL stake, the SRL board will be restructured “so as to ensure that no member of the promoter group of FHL is part of the SRL board,” it said.

The Fortis board will meet on May 10 to take a call on these offers based on the recommendations of an expert committee set up by it.