Mumbai/New Delhi: Hospital chain Fortis Healthcare Ltd agreed to acquire about 46% stake in Malar Hospitals Ltd, a top company official said, boosting the shares of both companies.
“We picked it up for an enterprise value of Rs560 million. The equity value on 100% basis is 420 million and debt of 140 million, which takes it to 560 million,” Chief Executive Shivinder Singh told reporters at a press conference in New Delhi.
The acquisition will be done by International Hospital Ltd, a wholly-owned subsidiary of Fortis.
Fortis, through its unit, will buy 28% of equity from promoters of Chennai-based Malar for Rs 30 a share, Singh said.
The loan of Rs 140 million will be converted to 25% of equity, 18% of which will go to Fortis, subject to Malar shareholders’ approval, Anil Panwar, Fortis’ president - finance, said.
The remaining 7% will go to Oscar Investments Ltd , another Ranbaxy group firm, he said.
Fortis sees a maximum investment of Rs430 million, including restructuring at Malar, Panwar said.
It plans to borrow Rs150 million to fund the acquisition, he added.
On the news, Malar shares rose 20% to a new high of Rs 38.25. Fortis shares too rose 4.7% before closing down 0.6% at Rs 85.25. Oscar shares ended up 5% at Rs 311.60.
The companies will make an open offer for the shares after the acquisition, Fortis said.
“We have been looking at expanding outside of north India. It is the beginning of entering the south,” Shivinder Singh said.
Singh said he was looking for more acquisitions, but ideally sees growth from an equal proportion of new hospitals, acquisitions and management contracts.
In 2005, Fortis acquired Escorts Heart Institute and Research Institute from Escorts Ltd.