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Thursday 23 January 2020

Malaysia’s IHH Healthcare wins race for Fortis

The Malaysian firm will make a mandatory open offer to public shareholders for 26% of the outstanding shares post-issuance

New Delhi: After a lot of uncertainty and speculations, the board of cash-strapped Fortis Healthcare on Thursday accepted Rs 4,000 crore bid from Malaysia-based IHH Healthcare Berhad (IHH). IHH Healthcare has outbid rival bidder TPG-Manipal in the race to buy a stake in Fortis.

The world’s second largest healthcare group by market capitalisation will buy a 26% stake in Fortis at Rs 170 per share, it said in a statement on Friday morning.

Fortis Healthcare, which has extended the deal deadlines three times, had shortlisted two entities to bid for the sale of its business.

On 3 July, the company received two binding proposals from IHH and TPG-Manipal consortium but Munjals-Burmans combines, which had earlier become the preferred bidder, and Radiant Life Care had backed out.

The Malaysian firm will make a mandatory open offer to public shareholders for 26% of the outstanding shares post-issuance.

The “proposal provides for refinancing of debt to the extent of Rs 2,500 crore”, the company said, adding funds infused would be used towards completion of the acquisition of assets of RHT, SRL private equity minority shareholders and short-term liquidity needs.

A mandatory open offer for public shareholders of Fortis Malar Hospitals Ltd would also be made at a price as determined under Regulation 8 of the SAST Regulations, the company added.

The company said its Board considered merits of both the binding bids and took into account recommendation of its Financial Advisors (Standard Chartered Bank and Arpwood Capital) and the legal advice from Legal Advisors (Luthra & Luthra Law Offices and Cyril Amarchand Mangaldas), in approving IHH’s offer.

Commenting on the development, Fortis Healthcare Chairman Ravi Rajagopal said, “The IHH proposal offers a more strategically and financially compelling proposition along with simplicity and certainty.”

Fortis said its board chose the offer from IHH after considering all key parameters such as significant primary funds infusion at highest available bid price (Rs 170/share) and sufficient funds commitment for future requirements.

The offer is at 20% premium to current market price, it said, adding the IHH proposal offers significant deal certainty given a simpler transaction structure and requirement for fewer approvals and a shorter timeframe.

It also provides an exit opportunity for shareholders through the open offer, in case they desire, Fortis said.

The newly reconstituted board of Fortis had on 29 May initiated a fresh bidding process to meet FHL’s long-term and short-term objectives.

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