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Fortis stake sale: Board opts for Munjal-Burman combine offer after five-way bidding war

New Delhi: The board of Fortis Healthcare on Thursday recommended the binding offer of the Munjal-Burmans combine to the shareholders after 18 months of hectic parleys with several potential investors for the sale of its business.

The board decided by a majority to recommend the revised offer of Hero Enterprise Investment Office-Burman Family Office made on 1 May for an upfront equity infusion of Rs 800 crore at a price of Rs 167 per share through preferential allotment, Fortis Healthcare Ltd said in a late-night filing to the BSE.

The Munjal-Burmans further agreed to invest another Rs 1,000 crore via preferential issue of warrants priced at Rs 176 per share, it added.

Of this Rs 250 crore will be upfront, being an amount equivalent to 25 percent of the consideration of warrants at a price of Rs 176 per share, Fortis Healthcare Ltd said.

Reacting to the development, Sunil Kant Munjal said: "We are delighted that the board has accepted our offer, which is, unarguably, the best solution."

Fortis Hospital. Pic courtesy: Fortis Hospital official website

Fortis Hospital. Pic courtesy: Fortis Hospital official website

"We are sure that the shareholders will see the intrinsic value in our proposal and repose confidence in us. As long-term investors, we are committed to help make Fortis the finest healthcare institution in the region, and create value for all stakeholders," he added.

Anand Burman said that Fortis is a national healthcare asset which has a good spread across the country and hoped to help the company become what it ought to be.

"Going forward, the immediate plan of action for the company should be to build on its strengths, retain talent, expand business and institutionalise processes at Fortis," he said.

The board also approved the appointment of Sabina Vaisoha and Rohit Bhasin as independent directors of the company for a period of five years from 27 March and 19 April, 2018, respectively, it added.

Fortis Healthcare had received binding offers from four entities - KKR-backed Radiant Life Care, IHH Healthcare, Manipal/TPG consortium, and Munjal and Burman family offices.

On 6 May, Manipal Health Enterprises had revised its offer for Fortis Healthcare Ltd (FHL) again, raising the value to Rs 8,358 crore. Earlier on 24 April, MHEPL and TPB combine had revised their offer for Fortis raising the value to Rs 6,322 crore. The earlier revised offer of 10 April valued Fortis hospital business at Rs 6,061 crore.

The consortium, which is the first to make a binding offer to Fortis, had initially valued the hospital business of the healthcare chain at Rs 5,003 crore in its offer on 27 March.

MHEPL also offered to subscribe to equity shares of FHL by way of preferential allotment for Rs 2,100 crore at a price per equity share of Rs 160.

Malaysia's IHH Healthcare Berhad and Munjals-Burmans (combine) had on 1 May revised upwards their respective offers for Fortis ahead of the deadline set by the board of the healthcare chain for submission of binding bids.

The other suitor IHH Healthcare Berhad increased its offer to directly invest in Fortis Healthcare at Rs 175 per share. It had earlier made a non-binding offer to invest in Fortis at Rs 160 per share.

IHH had then revised it to binding offer to immediately infuse Rs 650 crore by way of a preferential issue and allotment of equity shares at Rs 160 per share in FHL as part of an overall proposal to invest Rs 4,000 crore.

The Munjal-Burman combine also revised their proposal offering to increase their investment to Rs 1,800 crore, without any due diligence directly into the company from a previously revised offer of Rs 1,500 crore. Under their revised offer, they proposed to invest Rs 800 crore through a preferential allotment of equity shares at Rs 167 per share.

Further, another Rs 1,000 crore was offered to be invested via preferential issue of warrants priced at Rs 176 per share. Initially, they had proposed to invest Rs 1,250 crore in Fortis at Rs 156 per share.

KKR-backed Radiant Life Care had also revised bid for Fortis with a binding offer to acquire its Mulund hospital for an enterprise value of Rs 1,200 crore and a proposal to acquire stake in hospital business.

It had initially offered to acquire at least 26 percent stake in the healthcare chain at Rs 126 per share, excluding its diagnostic business SRL.

The fifth bidder, Fosun Health Holdings, an arm of Fosun International, which made a non-binding proposal to invest a total of $350 million (over Rs 2,295 crore) at a price up to Rs 156 per share, did not revise its offer.

From its first hospital at Mohali in 2001, Fortis Healthcare has grown to be a leading integrated healthcare delivery service provider in India.

Currently, the company has 45 healthcare facilities (including projects under development), around 10,000 potential beds and 314 diagnostic centres in India, Dubai, Mauritius and Sri Lanka.

Updated Date: May 11, 2018 07:33 AM

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