Mumbai: Manipal Hospital Enterprises Pvt. Ltd, which had agreed to acquire Fortis Healthcare Ltd’s hospital business, has submitted a revised offer in backdrop of mounting pressure from minority shareholders.
The revised offer pegs Fortis hospitals’ equity valuation at Rs6,061 crore (Rs116 per share)—an upward revision of about 21% from the previous offer, said a statement from Manipal Hospital.
The revised offer values Fortis Healthcare at Rs155 /share.
Manipal Hospital’s equity valuation continues to remain as before at Rs6,070 crore.
Manipal Education and Medical Group will separately purchase a 30.9% stake of SRL Ltd, a subsidiary of Fortis Healthcare, from existing private equity investors, and will take on board and management control of the business.
After the completion of the Fortis-Manipal deal, Manipal Group will work with Fortis Healthcare to enable the merger of SRL Ltd into the latter, it said.
Fortis Healthcare will demerge its hospital business into Manipal Hospitals and create a combined hospital business that will be a publicly traded company listed on the National Stock Exchange (NSE) and BSE Ltd.
A rights issue of Rs4,000 crore will also be initiated following the demerger to support the proposed acquisition of hospital assets owned by RHT Health Trust. This will provide an opportunity to Fortis Healthcare shareholders to participate on an equal basis with Manipal Group and TPG Capital to fund the capital needs of the combined hospital business.
“We hope that our revised offer addresses the concerns certain Fortis shareholders had raised and believe this offer is in the interests of all stakeholders, including Fortis’ shareholders," said Manipal Group chairman Ranjan Pai.
The Fortis Healthcare board had on 28 March announced the sale of its hospital assets to the Manipal-TPG combine. Apart from hospital assets, Fortis’s board also approved the sale of 20% stake in SRL Diagnostics.
As part of the proposed transaction, Manipal promoter Ranjan Pai and TPG Capital will invest Rs3,900 crore in Manipal Health Enterprises Pvt. Ltd.
On 2 April, Mint reported that some shareholders of Fortis Healthcare have come together to oppose the Fortis-Manipal deal. These investors, led by India-focused hedge fund Eastbridge Capital, have approached several other shareholders of Fortis Healthcare, including activist hedge fund Elliott Management Corp. and a mutual fund with a large shareholding, to oppose the deal, the report said.
“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 re-look at doing it on our own," Ranjan Pai said told Mint on Monday.
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.