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The development comes a little over a year after IHH, the world's second-largest provider of integrated market capitalization-based health services, pulled out of bilateral negotiations with promoters of the time, Malvinder and Shivinder Singh. The other Fortis bidder was the consortium of Manipal Hospitals and TPG.
The bid price of Rs 170 / share offers a premium of approximately 20% at the current market price and 30% at the unallocated price at July 2, 2018. The investment will also address liquidity concerns of the second Indian hospital chain. Fortis said in a statement Friday morning.
IHH will also launch an open offer of Rs 3300 crore to acquire 26% additional shareholders of the company at a price below Rs 170 / share. Their proposal provides for the refinancing of the debt up to Rs 2,500 crores. Funds to finance the acquisition of RHT badets, minority shareholders of SRL and short-term liquidity needs.
In comparison, Manipal-TPG had proposed to inject 2,100 crores of rupees per subscription to the preferential allocation at the price of 160 rupees per share. The proposal also included the purchase of PE investors from Fortis's Diagnostics SRL, which holds a third of the company, for Rs 1,134 crore, the acquisition of RHT badets partially using the proceeds of preferential allocation and partly through the debt financing and merger of Manipal Hospitals with Fortis, valuing the first at Rs 6,070 crores and the latter at a price per share of Rs160. A rights issue or QIP after the merger to repay the interim financing raised to complete the acquisition of RHT badets, the Singapore-based trust that owns several of the hospital badets has also been suggested. Fortis owns 29% of RHT.
The transaction should be completed within 7 business days of receipt of the shareholder and CCI approval that will be obtained concurrently with the shareholder approval and may take about 60-75 days.
IHH is present in 9 countries through 49 hospitals and over 10,000 authorized beds
"The IHH proposal offers a more convincing strategic and financial proposition, as well as simplicity and certainty.The process was relaunched on May 29, 2018 and was held in a fair manner The publication of the audited financial statements for fiscal year 2018 was a milestone in the overall success of the transaction, and as part of this process we look forward to continuing the dialogue with our stakeholders. shareholders before the extraordinary general meeting to approve the transaction, "said Ravi Rajagopal, chairman of the Fortis board of directors.
Interestingly, both bidders revised their bids downward for the final round.
Since the beginning of the week, the Fortis Board of Directors and its advisors, Standard Chartered Bank and Arpwood, are evaluating both offers in consultation with their lawyers Cyril Amarchand Mangaldas and Vaish Associates, according to a number of parameters. 1500 crore as a preferential allowance; Detailed financing plan for the acquisition of RHT Health Trust, the Singapore-based trust that owns the Fortis real estate badets, with a cut-off date set for September 30, 2018, and a plan for the SRL diagnostic arm, including an exit strategy for private investors who own a third of the unit.
Before proposing firm offers, IHH proposed to inject up to Rs 7,400 crores for more than 50% in Fortis Healthcare at Rs 175 per share.
Manipal-TPG proposed in May to inject Rs 2,100 crore through a preferential allocation to Rs 180 a share, which would allow it to own 18.4% in Fortis at a valuation of Rs 9,403 crore. It also plans to buy the PE investors of Fortis unit SRL Diagnostics for Rs.1,113.4 million. In the third step, he agreed to merge Manipal Health Enterprises with Fortis Healthcare following the restructuring of the SRL's board of directors.
Citi and HSBC work with IHH.
The acquisition of Fortis will give a strong franchise to IHH to significantly increase its presence in India, considered as its 4th largest global strategic market. India accounted for 6% of the IHH global business figure in 2017 and 1% of global EBITDA and continues to experience losses at the PAT level. But the CEO of IHH sees the market contributing 15 to 20% of its overall business figure over the next 5-10 years.
Supported by the Malaysian sovereign fund Khazanah Nasional, the IHH has been very active in India since 2002 and has already deployed more than 500 million dollars of investments. In 2015, IHH's Parkway Panthai acquired 51% of mainland hospitals for Rs. 300 crores and 74% of world hospitals for Rs. 1280 crore, both based in Hyderabad. In May of last year, the IHH ended its 12-year partnership with Apollo Hospitals after receiving an amount of Rs 1,900 crore from the investment. It is interesting to note that IHH and Fortis clashed aggressively when the Singh brothers, former promoters of Fortis, unsuccessfully attempted to acquire Parkway in 2010.
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