New Delhi: The acquisition of Fortis Healthcare Ltd has become a two-horse race with Malaysia’s IHH Healthcare Bhd and TPG-backed Manipal Health Enterprises Pvt. Ltd placing binding offers for the controversy-hit hospital operator.

The companies submitted their binding offers before the Tuesday deadline. While IHH Healthcare said in a Malaysian stock exchange filing that it has submitted an offer to buy the Gurugram-based firm, a person with direct knowledge of the matter said that TPG-Manipal, which had earlier agreed to pay 180 per share, may have lowered its bid. The person declined to be named.

This does not automatically give IHH Healthcare an advantage over TPG-Manipal as the winner will be judged on several parameters set by the newly constituted Fortis board. According to the new conditions, the buyer will have to make a minimum investment of 1,500 crore in Fortis Healthcare by way of preferential allotments, apart from having a plan for funding the acquisition of RHT Health Trust and one for providing exits to PE investors. The bidders will also have to disclose their source of funding.

To be sure, TPG-Manipal does not have the right to match a higher rival bid like it had in the earlier bidding round that was scrapped.

“The board of directors of the company has received binding bids on 3 July 2018. The binding bids will be evaluated by the board of directors of the company in consultation with its advisors," Fortis said in a regulatory filing.

A second person said on condition of anonymity that binding offers are expected to be opened by the board in consultation with its advisers later this week.

IHH Healthcare, Asia’s largest healthcare company, on Tuesday told Malaysian stock exchanges that it has submitted a binding offer for Fortis which “supersedes" and “replaces" the “Enhanced Revised Proposal". IHH’s offer is valid until 5pm on 16 July. The company did not disclose details of the fresh offer.

Replying to an email, a spokesperson from IHH said, “As an international leading healthcare player with significant operational expertise and track record, IHH is well-positioned to be a strategic investor and partner for Fortis. We believe our bid best addresses the short-term liquidity needs and long-term strategic requirements of Fortis. We look forward to a decision by the Fortis Board and will make an announcement if there are any material developments."

Earlier, IHH Healthcare had planned to put in as much as 7,400 crore for over 50% in Fortis at 175 per share, while Manipal-TPG had earlier proposed to infuse 2,100 crore through a preferential allotment at 180 a share, which would allow it to own 18.4% in Fortis at a valuation of 9,403 crore. It also planned to buy out Fortis unit SRL Diagnostics’s PE investors for 1,113.4 crore.

Among the parties who had placed bids in the earlier round but skipped this time are the family offices of Sunil Munjal and Anand Burman; and KKR-backed Radiant Healthcare. Mint on Tuesday reported that aggressive bids were unlikely for Fortis Healthcare after new revelations about financial impropriety and the changing regulatory scenario in Delhi.

Also read: Disclosures at Fortis paint a scary picture, investors seek deliverance

The subdued interest in bidding this time reflects the heightened uncertainty faced by the cash-strapped hospital operator since the Fortis board scrapped an earlier takeover attempt after a prolonged bidding process in which as many as five offers were considered.

Fortis initiated a fresh bidding process in May after a group of minority stakeholders objected to the bidding process. The new board was reconstituted on 22 May with Fortis Healthcare shareholders approving a resolution to appoint three new directors and remove Brian Tempest from the board, indicating that they were not happy with the sale process.

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