Fortis board to meet this week to consider M&A options

With the sale of Fortis Healthcare’s hospital assets expected to be delayed Bain Piramal Resurgence Fund and KKR & Co. have shown interest in Fortis

Fortis Healthcare declined for the second straight day on Monday after Malaysia's IHH Healthcare said Fortis has declined to engage with the company on a takeover offer citing binding agreements with other parties.

News of IHH's proposed US$1.27 billion bid for Fortis first broke last Wednesday when Bloomberg reported that IHH had sent a letter to the board of Fortis, saying it may be willing to pay as much as 160 Indian rupees per share to acquire control of the Indian company.

Fortis Healthcare had scaled 52-week high of Rs 230.90 on May 3, 2017, and 52-week low of Rs 106.65 on February 6 this year.

Fortis Healthcare said in a stock exchange filing its board planned to meet on April 19 to "consider all options".

In the last one week, Gurugram-based hospital chain received three offers - a revised offer from MHE, a joint bid from Hero Enterprise Investment Office-Burman Family Office, and a non-binding expression of interest from IHH Healthcare.

On March 27, Fortis Healthcare had announced plans to demerge its hospitals business (Fortis Hospitals) into Manipal Hospital Enterprises Private Limited (Manipal Hospitals).


As part of its proposal, Tan stated that IHH will also work with the board and management of Fortis to identify optimal financing solutions to enable the company to "fulfil its commitments during this challenging phase and stay afloat".

IHH had on April 11 issued a non-binding letter issued on April 11 to Fortis expressing its interest to participate in Fortis and its affiliates. Brothers Malvinder Singh and Shivinder Singh have resigned from the company and have lost control of their shareholding due to mounting debt. According to sources, IHH is likely to revise its offer to acquire at least 26% shares of the company against the wish of the company's board.

Meanwhile, proxy advisory firm Institutional Investor Advisory Services (IiAS) has stated that Fortis Healthcare shareholders need an objective and independent decision-making body to advise its board on the company's sale.

According to the report, all the three options have very different consequences for the future of Fortis and taking the right call will now be crucial.

As per the report, "shareholders need a decision-making body that is objective, independent, and does have a historical association with the promoter group or their companies".

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