IHH Healthcare may close Fortis hospital deal with Rs 4,700-5,400crore bid

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IHH Healthcare will first buy 25% in Fortis Healthcare and then make an open offer to buy at least 26% more.
IHH Healthcare will first buy 25% in Fortis Healthcare and then make an open offer to buy at least 26% more.

New Delhi : Malaysia’s reputed private healthcare group, IHH Healthcare Berhad will possibly gain control of Fortis Healthcare Ltd with an attractive offer to buy at least 51% in the concerned Indian hospital operator for ₹ 4,700-5,400 crore, two people aware of the bid details said.

IHH Healthcare offered to pay a higher price than TPG-backed Manipal Health Enterprises Ltd, the only other contestant for Fortis and also offered to buy out Fortis’s non-promoter shareholders at a 10-15% premium to the agreed purchase rate.

This successful bid will make IHH Healthcare, Southeast Asia’s largest hospital operator, to expand its presence in India swiftly. IHH Healthcare has followed Fortis despite the discovery of financial irregularities at the hospital operator after founders Malvinder Singh and Shivinder Singh left the company earlier this year after losing control due to increasing debt.

“The IHH Healthcare offer is higher than Manipal’s offer. But above all, IHH has agreed to make an open offer at a premium to the average market price (weighted average market price for 60 trading days preceding the announcement) as well as the price offered to the promoters,” said one of the two people cited above, requesting secrecy.

“Additionally, the plan given by IHH Healthcare for acquisition of RHT Health Trust (a Singapore-listed business trust that owns some of Fortis’s assets) is somewhat better than Manipal’s offer,” this person said.

IHH Healthcare will first buy around 25% in Fortis through a mix of direct acquisition and special allotment. This will cost around ₹2,200-2,400 crore. After that, IHH will make an open offer to buy at least an additional 26% in Fortis, which will involve an investment of about ₹2,500-3,000 crore, according to the newest proposal.