Certainty of liquidity convinces Fortis Board

NEW DELHI:  Fortis Director Brian Tempest on Friday said a majority of the Fortis Board members voted in favour of the offer made by the Hero-Burman duo for sale of its business, keeping in mind the certainty of liquidity flowing into enable greater efficiency. “The Board members in majority decided to recommend the Hero-Burman family offer to shareholders, looking at the binding bids for the point of certainty of liquidity flowing into the company,” Tempest said. Fortis Board expects the deal to get shareholders’ nod in 30 days.

That Munjal-Burmans have several investments (around 30- 40) in health sector, was another reason that worked in its favour, according to Fortis. Munjal-Burman jointly offered to invest Rs 1,800 crore in Fortis without due diligence at weighted average valuation of Rs 175 per share, through a combination of preferential equity and warrants allotment.

However, the decision to choose Hero-Dabur was not a unanimous one as five of the eight directors of the Fortis Board voted in favour of the offer made by the Hero-Burman duo, while the three voted for other. “All three directors, who have been around for long, voted in favour of the bid made by the Hero- Burman duo. Of the other five new members, two voted for Hero- Burman, while the remaining three voted for a different bidder,” said Tempest. He added that the immediate task of the new management of Fortis would be to focus on the performance and results of the of hospital business. Post emerging the favourites, Sunil Munjal of Hero Enterprise said, “We think the offer that we bring to the table will be beneficial for everyone at Fortis — doctors, patients, shareholders, medical employees and non medical employees.”

He added that only CCI clearance and shareholders’ approval is required now. On the major issue of erstwhile promoters, Malvinder Singh and Shivinder Singh, continuing on the Board of diagnostics chain SRL, Tempest said they should step down. In another significant update on Friday, Fortis also announced it would hold an extraordinary general meeting on May 22 to vote on a resolution moved by minority shareholders to remove four members from its Board.

Other bidders await shareholders' move

Two parties — IHH and Manipal-TPG consortium — who were seen as top runners for the Fortis Board’s nod, expressed disappointment. “We are disappointed by the decision made by the Board of Fortis, as we believe we submitted the most compelling bid for the benefit of all Fortis stakeholders,” said Tan See Leng, MD & CEO of IHH Healthcare. IHH said it is now evaluating its options, including reaching out directly to shareholders to buy the healthcare chain. Manipal, meanwhile, said their offer was the best one, and now, it’s for shareholders to decide if they will accept the Board’s recommendation.