Fortis board decides to consider only Binding Offers, Faces Backlash

New Delhi: While the many offers are available on the table of Fortis, the board considering the offers has decided to take consideration only of binding offers.

The Fortis board has formed an expert panel to evaluate only binding offers and make a final recommendation by April 26. The troubled healthcare chain had received binding offers from Manipal/TPG consortium, and Munjal and Burman family offices.

It had also received non-binding expression of interests from Malaysia’s IHH Healthcare Berhad, Chinese firm Fosun Health Holdings Ltd., and KKR-backed Radiant Life Care. With the decision of the board these seem to be out of consideration as of now.

Radiant offered Rs 165 per share, while IHH has indicated Rs 160 apiece. Manipal placed Rs 155 per share and Munjals and Burmans are offering nearly Rs 162.

In order to make a binding offer, IHH and Radiant have sought time for limited due diligence.

TOI reports that Fortis board also rejected Manipal proposal to allow three weeks due diligence to all competing bidders pointing that the hospital network didn’t have enough time to deal with non-binding offers given its precarious financial situation.

Fortis board on Thursday has received a letter from Manipal Health in which the firm has shown its willingness towards putting aside an exclusivity to facilitate due diligence if an option to match the best offer was provided.

In the letter, Manipal has also said it was ready to extend immediate loans to ensure smooth running of the hospital network according to the news report.

Fortis Healthcare spokesperson, however, on the issue of the Manipal Letter told TOI, “All communications received with regard to the bidding process were evaluated by the board. The letter from Manipal was also tabled and examined. The two points were not the only contents of the letter. It was a full six-page document, detailing all the conditions, the content of which is strictly confidential and hence cannot be shared,”

The shareholders, East Bridge Capital and Jupiter India Fund, which have an aggregate of 12.04 percent of the paid-up capital of the company, have sought removal of Brian Tempest, Harpal Singh, Sabina Vaisoha and Lt Gen Tejinder Singh Shergill from the board and pressed for calling for an extraordinary general (EGM) meeting.

Meanwhile, Bloomberg has reported that a proxy advisory firm has slammed a move by the board of Fortis to rebuff several bids as a takeover battle for India’s second-largest hospital chain ramps up.

The fact Fortis has received five competing offers shows its assets have potential, according to Amit Tandon, a managing director at Institutional Investor Advisory Services. Directors of Fortis shouldn’t exclude any suitors from the process and should try to work with companies that have put in non-binding bids, Tandon said.

“The board needs a revamp,” Tandon said by phone. “The existing directors have been associated with the company too long. It doesn’t give you a sense of comfort.”

“The move to consider only binding offers seems to be a reluctance of the board to allow any due diligence,” said Shriram Subramanian, founder and managing director of another proxy firm InGovern Research Services Pvt.

The development would pile up investor pressure on an embattled Fortis, which has been targeted by activist hedge funds. Some investors have sought a transparent, time-bound sale process to unlock best value for shareholders.