After Manipal-TPG, IHH jumps back into race for Fortis Healthcare

NEW DELHI: Malaysian healthcare group IHH has extended the validity of its offer to pick up stake in Fortis Healthcare days after Manipal-TPG had upped its offer to acquire the group's hospital business. IHH's offer, which could see it infusing up to Rs7,400 crore into Fortis for over 50% stake in the company, is now valid until May 29, the company told the Malaysian stock exchange on Thursday.

The move comes even as the Fortis board on May 10 picked a proposal by Sunil Kant Munjal of Hero Enterprises and the Burman family of Dabur group. This deal was accepted despite opposition by financial advisers Arpwood Capital and Standard Charted, who favoured offers made by IHH and Manipal-TPG.

Following the board’s decision, Manipal-TPG on Monday upped its offer for Fortis, proposing to infuse Rs 2,100 crore at Rs180 per share from Rs160 per share.

“If there is indeed a new bid process that the board is proposing to initiate, we would like to participate in such a process and request that we be kept informed of any developments regarding the same,” IHH stated in a letter to the Fortis board of directors on Thursday.

IHH’s proposal includes an infusion of Rs650 crore into Fortis upfront at Rs175 per share. Following a week’s due diligence, the Malaysian firm has proposed to inject an additional Rs3,350 crore at Rs175 per share if it is satisfied with its findings.

Provided IHH puts in all Rs4,000 crore, picking up around 30.6% stake in Fortis, it would have to acquire 26% from minority investors of the company as part of a change-of-control open offer.

This would mean IHH investing approximately Rs7,400 crore for Fortis, IHH CEO Tan See Leng earlier suggested.

Compared to this, the Munjal-Burman combine’s offer proposes an infusion of Rs1,050 crore upfront through preferential allotment of equity shares and convertible warrants. An additional Rs 750 crore would be brought in after approval of Fortis’ shareholders.

IHH had expressed commitment to invest around Rs 7,400 crore into Fortis, the company’s CEO earlier told ET after the Fortis board chose the Munjal-Burman offer.

“We had offered a transparent, holistic, simple and compelling offer and are disappointed. Our bid, which offers the highest price and most comprehensive solution, addresses the short term liquidity requirements and long term strategic objectives of the company,” he said.

It is not clear whether the board is considering IHH and Manipal-TPG’s latest offers. An email sent to independent Fortis director Brian W Tempest, who chaired the meeting on May 10, remained unanswered by press time on Thursday.

The independence of the board has been called into question by shareholders during the company’s efforts to lock down a deal. In April, a group of minority shareholders calling for an Extraordinary General Meeting to oust four of the current board members over these concerns.

The spotlight on the board also prompted former Fortis co-promoter Shivinder Singh to write to the board n May 14 raising objections on the way the bidding process has been run. He also sought an EGM on June 9 to ratify the Munjal-Burman proposal.