Photo: Pradeep Gaur/Mint
Photo: Pradeep Gaur/Mint

Fortis Health tries to soothe investors as IHH open offer remains in abeyance

  • The statement by Fortis Healthcare comes as the stock has declined nearly 11% over two trading sessions on the National Stock Exchange due to the stalled open offer and the contempt notice against the company
  • Fortis Healthcare further said when IHH Healthcare had bought 31% stake in Fortis Healthcare for 4,000 crores, there was no stay on the stake sale

NEW DELHI : Fortis Healthcare on Monday said it will explore legal means in response to the Supreme Court’s suo motu contempt notice against the company and withholding of an open offer by its new promoter IHH Healthcare Berhad.

The statement by Fortis Healthcare comes as the stock has declined nearly 11% over two trading sessions on the National Stock Exchange due to the stalled open offer and the contempt notice against the company. The stock was down 3% on the NSE in early trade. It recovered following the statement, and at 1233pm, it was at Rs143.00, down 0.6% from the previous close.

“The Company would be appropriately responding to these concerns of the Hon’ble Court by providing cogent evidence. The Company remains firm that these transactions were, at all times, conducted in a fair and transparent manner after obtaining all relevant regulatory, shareholder and corporate approvals and only after making all due disclosures to public shareholders of the Company and to the regulatory authorities, in a timely manner," Fortis Healthcare said in a filing with exchanges.

Fortis Healthcare further said when IHH Healthcare had bought 31% stake in Fortis Healthcare for 4,000 crores, there was no stay on the stake sale.

It also said the acquisition was done through a fresh issue of equity shares, and not bought from the company’s shareholders, including embattled former promoters Malvinder and Shivinder Singh.

Also, during the 4,000 crore acquisition, the former promoters of Fortis Healthcare held just 0.77% stake in the company, and did not wield any influence over the selection of IHH Healthcare as the buyer, the company said.

Fortis Healthcare also made a similar clarification over the acquisition of clinical establishment assets of RHT Health Trust for 4,666 crore, when the former promoters held only 0.16% stake in the company.

After a long bidding war, IHH had, in July last year, clinched the deal by outbidding a consortium of Manipal Health Enterprises and TPG Capital.

Acquisition of the 31% stake triggered a mandatory open offer for another 26% stake by IHH Healthcare, but this has been withheld due to a stay by the Supreme Court since December last year following a plea by Daiichi Sankyo.

The apex court on Friday held Fortis Healthcare, and its former promoters Malvinder and Shivinder Singh, guilty of contempt of court for sale of shares to Malaysia’s IHH Healthcare Berhad, and also extended the stay on the open offer.

It also asked the brothers to deposit 1,175 crore each to avoid contempt. The Supreme Court will next hear the case on 3 February.

The Supreme Court issued the notice against the company in a contempt plea by Japanese pharmaceutical firm Daiichi Sankyo Co Ltd against the Singh brothers over enforcement of a 3,500 crore arbitration award.

The award was made by a Singapore arbitration tribunal after the Singh brothers were found guilty of concealing information about regulatory issues of erstwhile Ranbaxy Laboratories during its sale to the Japanese firm.

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