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IHH Healthcare Berhad, one of the largest health care groups in the world by its market capitalization, won the race for the acquisition of the second largest health network in India, Fortis Healthcare Ltd (FHL ) outbidding on the other competitor, the TPG -Manipal combine. IHH will invest Rs 40 billion to Rs 170 per share through a preferential allocation. The Fortis and Fortis Malar shares reacted positively to the news, increasing by four per cent and eight per cent respectively during the day. The Board of Directors of Fortis unanimously selected IHH's offer on TPG-Manipal for the simplicity of the proposal, the relative certainty as well as the price per share. "Both are well-known players in the healthcare industry and we would have been delighted to have either a partner," said Ravi Rajagopal, president of Fortis. The four-month auction war for Fortis Healthcare, which runs a network of 34 hospitals (4600-bed capacity), has sparked the interest of domestic and international contenders, including Chinese Fosun. The IHH offer is 19.5% higher than FHL's closing price on Thursday on the stock exchanges. Northern TK Venture Pte Ltd, Singapore, an IHH unit, will receive 235.3 million new shares of FHL through a preferential allocation that would give approximately 31% of the share capital of the company. business. IHH will make a mandatory tender offer to shareholders for 26% of outstanding shares after the issue. This will bring the IHH stake in the company to 57%. It would also make a mandatory open offer for public shareholders of Fortis Malar hospitals. Fortis stated that the proposal provides for the refinancing of the debt up to Rs 25 billion. The injected funds would be used to complete the acquisition of the assets of RHT (which owns some of Fortis' assets) and to buy back the participation of PE investors in SRL, as well as to meet short-term liquidity needs . The transaction, which must be approved by shareholders and CCI, should be completed within 60-75 days. IHH would now have majority representation on the Fortis Board of Directors. Although no change is planned in the management structure, the IHH can review the talent bank and possibly supplement or supplement it. Ranjan Pai, MD and CEO, Manipal Group, wished IHH good health and declared that it respected the decision of the board of directors. "In our opinion, our own offer for Fortis reflects a comprehensive analysis of the risk and reward of the company." Dip in valuation The offer values Fortis at Rs 88.8 billion, or 22.3 times the EBF F18 of FHL and a premium of 19.5% and 15.3% at the closing price on July 12, 2018 and a weighted average volume price of 60 days, respectively. The open offer of Fortis Malar is 58 rupees per share. The valuation, however, decreased after the revelations on B2B deposits and the controversies surrounding the Fortis and SRL brands. The company had provisioned Rs. 5.8 billion in its fourth quarter results, the recoverability of which is doubtful. Rajagopal stated that the board would clearly have liked to see a better price, but the bidders took stock of the verified results and took them into account in their calculation. TPG-Manipal had valued Fortis at Rs 180 per share in their previous offer, which they revised down to Rs 160 per share. IHH also reduced its offer by 175 Rs per share earlier. The shareholder vote is expected to occur in the coming weeks, but proxy advisory firms such as InGovern have argued that minority shareholders should be satisfied with the deal. Shriram Subramanian, founder and CEO of InGovern, said, "Both parties want to quickly close the transaction, which is a plus."
The company was losing ground and had problems with working capital. which includes the affairs of hospitals. "
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