NEW DELHI: Ending months of the bidding war between national and international suitors to acquire India’s second largest healthcare chain, the cash-strapped Fortis Healthcare on Friday accepted the investment offer made by Malaysia’s IHH Healthcare.
“The Board of Directors of Fortis Healthcare Limited unanimously decided to recommend the binding investment proposal from IHH Healthcare Berhad to invest Rs 4,000 crore by way of preferential allotment at a price per share of Rs 170,” Fortis said in a statement.
The transaction is now subject to approval from shareholders and the Competition Commission of India, which are expected to come through within the next 60-75 days.
Northern TK Venture Pte Ltd, Singapore, a wholly owned subsidiary of IHH, will be issued 235.3 million new Fortis shares through a preferential allotment, giving it around 31 per cent of the company’s total voting equity share capital.
The deal also offers a cash exit option to 26 per cent shareholders on expanded share capital through the mandatory tender offer of up to Rs 3,349 crore at a price of not less than Rs 170 per share, which, when successful, will take IHH’s equity interest in Fortis to around 57 per cent.
The funds infused would be used towards completion of an acquisition of assets of RHT, SRL private equity minority shareholders and short-term liquidity needs.
The bid price of Rs 170/share offers a premium of around 20 per cent to the current market price and 30 per cent to the unaffected price as on July 2, 2018, Fortis said.
The investment will also address the liquidity concerns of the hospital chain. The proposal made by IHH provides for refinancing of debt to the extent of Rs 2,500 crore.
In comparison, Manipal-TPG had offered to infuse Rs 2,100 crore through subscription to the preferential allotment at a price of Rs 160 per share.
Two other interested suitors - Munjal-Burman combine, the winner of previous bid round, and KKR-backed Radiant Life Car - had backed out from the bidding race, amidst various irregularities reported in their Q4 results.
The takeover battle for Fortis Healthcare started earlier this year when founders Malvinder Singh and Shivinder Singh lost shareholding control due to mounting debt.