Manipal Hospitals makes revised offer for Fortis Healthcare, proposes Rs 4,000 cr right issue

New Delhi: Manipal Health Enterprises on Tuesday raised its offer for Fortis Healthcare Ltd by valuing the hospital business higher at Rs 6,061 crore, according to a regulatory filing.The latest move comes amid concerns raised by various FHL shareholders about the valuation of the hospital business. In an unsolicited offer, Manipal Health said it “proposes to offer an upward revision of Rs 1,058 crore to the shareholders of FHL over and above hospital business of FHL’s equity valuation of Rs 5,003 crore”. This would result in an equity value of Rs 6,061 crore being attributed to the hospital business of FHL, which would result in a “more favourable share exchange ratio for shareholders of FHL”, Manipal Health said in the letter to FHL. The letter, which has been submitted to stock exchanges by FHL, also said that Manipal Health would look at a rights issue worth up to Rs 4,000 crore after completion of the demerger. The rights issue was not in the original offer. The deal, unveiled late last month, was expected to run into opposition from Fortis minority shareholders as investors expressed their unhappiness by sending Fortis shares down 14 percent. [caption id=“attachment_4343233” align=“alignleft” width=“380”]  Screengrab from Fortis hospital’s official website.[/caption] Fortis Chief Executive Bhavdeep Singh had initially said the deal would be worth Rs 15,000 cr, according to the estimated value of both firms and the cash involved. He had not give a breakdown of the cash and equity portions of the deal. The deal proposes to create a combined company, Manipal Hospitals, that would be listed on the bourses. About 38 percent would be owned by Manipal Chief Executive Ranjan Pai, while US buyout firm TPG would hold 20.7 percent. As per the offer, Manipal Health would not purchase any equity shares from FHL and SRL would continue to be a subsidiary of the latter. The original proposal had envisaged purchase of 1.59 crore or 20 percent stake of SRL for a consideration of around Rs 720 crore. Last month, FHL board approved the demerger of Fortis hospitals business, which would be acquired by Manipal Hospitals and TPG Capital, along with the sale of 20 per cent stake in diagnostics chain SRL Ltd. Ranjan Pai and TPG would invest Rs 3,900 crore into Manipal Hospitals. “FHL shall not be entitled to accept the revised proposals piece-meal and rejection/ non-acceptance by FHL of any of the revised proposals shall be considered a rejection of the all the revised proposals,” the letter said. If successful, the acquisition would create one of India’s biggest healthcare providers and help resolve an uncertain outlook for Fortis, which has been under a cloud as authorities investigate whether its founders siphoned funds out of the company. (With inputs from agencies)