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Business News/ Companies / News/  Fortis crashes after SC halts open offer
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Fortis crashes after SC halts open offer

The Supreme Court on Thursday declined to allow Malaysia’s IHH Healthcare Bhd to proceed with an open offer to buy additional shares of Fortis Healthcare Ltd, triggering a rout in the Indian hospital operator’s stock.

SC also sent back to Delhi HC a case relating to the sale of Fortis shares by its lenders to IHH.Premium
SC also sent back to Delhi HC a case relating to the sale of Fortis shares by its lenders to IHH.

MUMBAI : The Supreme Court on Thursday declined to allow Malaysia’s IHH Healthcare Bhd to proceed with an open offer to buy additional shares of Fortis Healthcare Ltd, triggering a rout in the Indian hospital operator’s stock.

The ruling sent Fortis shares plunging by as much as 20%, their steepest daily decline since January 2008. However, the stock partly recovered the losses, ending trading on Thursday at 265.30, lower by 14.75%.

The top court also sent back to the Delhi high court a case relating to the sale of Fortis shares by its lenders to IHH and asked the court to consider a forensic audit into the sale on a plea by Japanese drugmaker Daiichi Sankyo, which is trying to enforce a 3,500 crore arbitration award it won against Fortis’ founder brothers Malvinder and Shivinder Singh in Singapore. The dispute relates to the 2008 sale of drugmaker Ranbaxy Laboratories Ltd by the brothers to Daiichi Sankyo.

The top court bench, led by Chief Justice U.U. Lalit, said the stake sale matter has been sent to the high court since it has already been hearing it.

In a statement to the exchanges, Fortis said it is seeking legal advice. “Proceedings before the Supreme Court have concluded with certain directions, and the suo motu contempt has been disposed of," Fortis said.

In 2018, IHH Healthcare bought a controlling 31% stake in Fortis for $1.1 billion, prompting a mandatory open offer to purchase an additional 26% of Fortis’ shares from ordinary stockholders. An independent board supervised the stake sale after the Singh brothers were ousted.

But soon after the sale, the apex court asked the companies to maintain status quo on the transaction with the Malaysian healthcare firm.

The Securities and Exchange Board of India and Fortis had petitioned the court to vacate the stay on the open offer on the ground that Daiichi’s efforts to enforce the arbitration ruling would not be affected by the open offer.

In a lawsuit filed against the Singh brothers, Daiichi Sankyo claimed that despite the Supreme Court’s prohibition, they had pledged 1.7 million shares of Fortis Healthcare held by Fortis Healthcare Holding.

The brothers were ordered to pay Daiichi Sankyo about 2,563 crore in damages, plus interest of 4.44% annually, from 7 November 2008 to the date of the decision by an arbitration tribunal in Singapore in April 2016.

The Singh brothers are in jail on separate fraud and money laundering charges.

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ABOUT THE AUTHOR
Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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Published: 22 Sep 2022, 11:46 PM IST
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