The Supreme Court will be hearing the matter related to IHH Healthcare's open offer to acquire additional shares in Fortis Healthcare on February 10.
IHH Healthcare acquired a 31 percent controlling stake in Fortis in 2018, which triggered a mandatory open offer to acquire another 26 percent of Fortis shares from the market.
The open offer has not moved forward due to ongoing legal proceedings with respect to the transaction. The apex court blocked the open offer on a plea filed by Japanese drugmaker Daiichi Sankyo, which is trying to enforce a Rs 3,500 crore arbitration award it won in a Singapore tribunal against Fortis’ erstwhile promoters, brothers Malvinder Singh and Shivinder Singh.
IHH Healthcare on February 8 said its intent to continue on its growth plans for Fortis Healthcare, and the transaction to acquire the latter was done with the necessary corporate and regulatory approvals in accordance with all applicable laws.
The acquisition of Fortis, however, has been its single biggest bet in India. IHH Healthcare acquired a 31 percent stake in Fortis Healthcare in August 2018 by paying $1.1 billion in a bidding process overseen by an independent board. However, it couldn't make progress on its mandatory open offer to acquire a 26 percent stake due to a Supreme Court stay order.
India is the Group’s fourth home market, together with Malaysia, Singapore and Turkey. Between Fortis and IHH’s Global Hospitals and Continental Hospitals, the Group is a leading private healthcare operator in India with a network of more than 30 hospitals.
Committed to Fortis investment
Three months after IHH Healthcare’s successful bid to acquire Fortis, its own shareholding underwent a significant change. Malaysian sovereign fund Khazanah Nasional Berhad, which was its largest shareholder, sold a 16 percent stake to existing investor Mitsui, making the Japanese trading company the biggest shareholder in IHH.
Mitsui now has a 32.9 percent shareholding in IHH Healthcare.
Koji Nagatomi, Mitsui’s Executive Managing Officer and Country Chairperson in India, told Moneycontrol last year that the Japanese industrial group will continue to execute Fortis turnaround plan.
"As the largest shareholder and working closely with the Fortis management team, IHH has put in place and continues to execute on a turnaround plan for Fortis which had been facing financial difficulties. Over the past two years, Fortis has progressively strengthened its balance sheet, improved its financial liquidity as well as streamlined its organisational structure to become more efficient," IHH said in a statement.
"This has helped Fortis to remain resilient amid the impact of COVID-19, and to continue to play a critical role in supporting the Indian Government in combatting the pandemic," the statement added.
Fortis posted a strong recovery in Q3FY21 with a net profit of Rs 53.88 crore mainly on account of the robust performance of its diagnostics segment and reduction in expenses. The company had posted a net loss of Rs 69.32 crore in the corresponding period of the previous fiscal. Revenues from operations during October-December 2020 stood at Rs1,177.03 crore.