Fortis Healthcare demerger: Malaysia's IHH may table rival bid this week; minority shareholders might welcome offer

Malaysian investment holding company IHH Healthcare Bhd could make a rival offer for Fortis Healthcare Ltd in the coming days, valuing the Indian company at as much as $1.3 billion, according to media reports that cited people with knowledge of the matter. News of IHH’s move comes two days after Manipal Hospitals Enterprises Private Ltd raised its offer for Fortis Healthcare’s hospital business, and over a week after ace investor and minority Fortis shareholder Rakesh Jhunjhunwala questioned an earlier offer by TPG-backed Manipal. [caption id=“attachment_4343233” align=“alignleft” width=“380”] Representational image. Fortis hospital’s official website.[/caption] On Tuesday, Manipal Hospitals Enterprises Private Ltd raised its offer to buy Fortis Healthcare Ltd’s hospital business by about a fifth, in an attempt to win over minority shareholders opposed to the deal. The revised offer valued Fortis’ hospital business 21 percent higher at 60.61 billion rupees, or 116 rupees per share. Manipal first offered to buy Fortis last month in a deal that would combine its 14 hospitals with Fortis’s portfolio of 34 hospitals, creating a 150 billion rupees company and a formidable rival to Apollo Hospitals Enterprise Ltd. But the previous bid, which offered shareholders 10.83 shares in the combined company for every 100 Fortis shares held, was panned by investors. It knocked Fortis stock down 14 percent on the day the deal was announced and prompted Chief Executive Bhavdeep Singh to make conciliatory comments about keeping minority shareholders’ concerns in mind. The older offer also met with disapproval from shareholders including from Jhunjhunwala, who along with his associates, holds around one percent of Fortis. The ace investor had said that Fortis should be sold via a ‘fair’ process that allows all interested parties to bid, hinting that a clutch of minority shareholders were hoping to hear from IHH. Speaking to  The Economic Times, Jhunjhunwala said that he had no plan to vote against the deal. “First, let a stage come when the deal needs to be opposed. Today, it’s just an announcement. The board doesn’t have the power to do the deal…I think the stage where the deal will need to be voted upon will not come at all…" he told the newspaper. With inputs from agencies