Fortis stake sale: Manipal Hospital, TPG Capital Management re-enter race with Rs 180 a share

New Delhi: In yet another twist in the ongoing race for Fortis, Manipal-TPG combine on Monday revised their offer for the cash-strapped healthcare chain with a proposal to invest in the company at Rs 180 per share, thereby increasing valuation of the company to Rs 9,403 crore.

Having lost out to the Munjal-Burmans combine last week, Manipal-TPG which was the first to make a binding offer, also asked the board of Fortis Healthcare Ltd (FHL) to reconsider its decision of recommending the same to the shareholders of the company.

In a regulatory filing, FHL said it has received revised offer from Manipal and TPG with a proposal to invest in the company, while making public a letter sent by Manipal Health Enterprises Pvt Ltd (MHEPL) to the Fortis board.

"For purposes of the merger, a value of Rs 9,403 crore shall be attributed to FHL and a value of Rs 6,070 crore shall be attributed to MHEPL as had been originally determined by the independent valuers of for the purpose of the transaction," MHEPL said in its letter presenting the revised offer.

It further said, "The preferential allotment shall be undertaken at a price of Rs 180 per share."

MHEPL claimed that its modified new offer "is significantly better than any other offer/bid FHL has received to date, including the Hero-Burman offer".
Four days after FHL board decided to go with the Rs 1,800 crore offer from Munjal-Burmans combined, Manipal said the winning bid did not address the host of issues which are plaguing the cash-strapped healthcare major.

"...unlike our offer, the Hero and Burman offer only partially solves the short-term liquidity concerns of FHL and fails to deliver any long-term benefits to FHL or solve the larger issues facing FHL," Manipal said.

A Fortis hospital building in New Delhi, India. Reuters

A Fortis hospital building in New Delhi, India. Reuters

The issues include FHL's payment obligations for the acquisition of the relevant Indian entities from RHT and the exit required to be provided by FHL to the private equity investors in SRL, it added.

Stating that Manipal-TPG have been following the developments of the past few days after the announcement by FHL and as reported in media there has been negative reaction of FHL shareholders to the decision of the FHL board to accept the Hero and Burman offer, the letter said.

"In light of this procuring the approval of 75 per cent of FHL shareholders for the Hero-Burman offer is likely to be very challenging for the FHL board," Manipal said, adding its modified new offer is binding in its entirety and is valid till 29 May.

Comments from Munjal-Burmans combine could not be immediately obtained.

Asking the board of FHL refer their "modified offer" to the company's shareholders, MHEPL said, "We request the Fortis board to reconsider its decision to refer the Hero and Burman offer to the shareholders."

Earlier on 6 May, Manipal Health Enterprises had revised yet again its offer for Fortis Healthcare Ltd (FHL), raising the value to Rs 8,358 crore. It offered subscribe preferential allotment for Rs 2,100 crore translating its proposed investment at Rs 160 per equity share.

The consortium had initially valued the hospital business of the healthcare chain at Rs 5,003 crore in its offer on March 27.

As many as five suitors were in the race for Fortis but after the company's board decided to evaluate only binding offers, Malaysia's IHH Healthcare Berhad, Munjal-Burmans, Manipal-TPG and KKR-backed Radiant Life Care put in their bids.

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

The Munjals and Burmans were chosen by the Fortis board on 10 May for their revised offer which proposed to increase their investment to Rs 1,800 crore, without any due diligence, from a previously revised offer of Rs 1,500 crore.


Updated Date: May 15, 2018 08:24 AM

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