Mumbai: The sale of Fortis Healthcare Ltd’s hospital assets to a Manipal Health Enterprises Pvt Ltd-TPG Capital combine can still swing either way with a 50% probability of the deal going through, said the managing director and chief executive at Manipal Health in an interview.

“We are still at a 50-50 chance of it going (through). It’s an opportunity that we have. If it goes through great, otherwise hard luck. We will have to look at it some other time or relook at doing it on our own," said Ranjan Pai.

The statement puts a question mark on the impending Fortis-Manipal deal, already seeing resistance from Fortis Healthcare shareholders.

Pai said that at this juncture, resistance from shareholders is likely to pose the biggest challenge to the deal. While he added that no negotiations can be done at this point of time with shareholders, Manipal and TPG together will continue to engage with them. “I feel that shareholder vote is the biggest hurdle at this point of time. We cannot be negotiating with the shareholders at this point of time. We can only put forward our view as to why we think our proposal is good."

On 2 April, Mint reported that some shareholders of Fortis Healthcare have come together to oppose the deal. These investors, led by India-focused hedge fund Eastbridge Capital, have approached several other shareholders of Fortis, including activist hedge fund Elliott Management Corp. and a mutual fund with a large shareholding, to oppose the deal, the report said.

The Fortis-Manipal deal is also likely to face hurdles from Japanese drug maker Daiichi Sankyo, which has been fighting a legal battle with Fortis Healthcare’s erstwhile promoters Malvinder and Shivinder Singh.

On 3 April, Mint reported that the Delhi high court had directed Fortis Healthcare to file its reply and affidavit to an application moved by Daiichi to prevent the sale of Fortis Healthcare.

The application was moved by Daiichi in light of its ongoing execution proceedings against the Singh brothers for recovery of a Rs3,500 crore arbitral award. Fortis Healthcare, which was earlier not party to the Daiichi-Singh brothers arbitration case, was made a party to the present application by the court.

“For the last 18 months this company has been on the block and nobody has stepped up till now, and after we have moved ahead, people are saying proper process has not been followed. It is not our fault, investors should have changed the board if they felt that the process was not right. Our point is that at that point of time we were negotiating with a legitimate board of that company and unfortunately there were no promoters and we had to negotiate with the management team, so that was the issue," Pai said.

The deal will catapult Manipal Health to pole position among India’s largest hospital chains, with a combined annual revenue of Rs5,400 crore. The combined entity will also become the largest hospital chain in terms of number of beds (around 11,000 against current leader Apollo Hospitals Enterprise Ltd’s 4,550).

In March, Puneet Bhatia, country head for TPG Capital Asia had told Mint that the deal was not done. “It (the deal) is still not settled and we have to jump through multiple hoops, but this is the first big milestone."

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