Hospital chain Fortis Healthcare Ltd said on Tuesday it was evaluating an unsolicited offer received from rival Manipal Health Enterprises Pvt Ltd on March 23.
Fortis, based in Gurugram, had not yet made a firm decision about the offer, it said in a statement, pushing its shares down 2.5 percent in afternoon trading.
The shares rose as much as 4.2 percent earlier in the day after the Mint newspaper reported that Fortis was expected to meet Manipal Health to approve the proposed merger.
The statement comes weeks after media reports said U.S.-based private equity firm TPG Capital, a shareholder in Manipal, wanted the two companies to merge, creating the largest healthcare services provider in the country.
Fortis' main backers Malvinder Singh and Shivinder Singh resigned from its board last month following legal troubles related to the sale of their stake in Ranbaxy to Japan's Daiichi Sankyo Co Ltd. The Ranbaxy case is unrelated to Fortis.