MUMBAI: India's privately-held Manipal Hospitals had to take a "more risky" approach to buy domestic rival Fortis Healthcare Ltd, so that it did not lose out to other suitors, Manipal's Chief Executive Ranjan Pai told Reuters.
Manipal on Sunday sweetened its bid for Fortis, offering to inject 21 billion rupees ($312.8 million) to help the ailing hospital operator meet its immediate cash needs, a move that Pai said was risky because Fortis is embroiled in a regulatory probe that is clouding its prospects.
Manipal and its consortium partner TPG Capital are offering 160 rupees per share to buy Fortis, valuing the company at 83.58 billion rupees ($1.24 billion).
Fortis shares closed down 1.3 percent at 155.95 rupees on Monday. They have risen nearly 9 percent since news broke in late March that it was close to a deal with Manipal.
"Yes, this is a more risky structure ... because we don't know what's going to come out of the SFIO," Pai said on Monday.
He was referring to India's Serious Fraud Investigation Office that is investigating allegations that Fortis' founders Malvinder Singh and Shivinder Singh took funds from the company. The founders, who have since left the company, deny wrongdoing.
In March, Fortis said it was looking into the allegations and that it expected the SFIO probe to end in less than 9-12 months.
Fortis has been a target of five firms and investment groups, who are vying for control of its 30-odd hospitals across India, including Malaysia's IHH Healthcare that wants to invest 40 billion rupees and take control of the company.
Pai said he did not expect to face antitrust hurdles because the combined company's market share will be in "single digits" and expects the merger to take six-nine months to complete.