Rakesh Jhunjhunwala questions Fortis deal with Manipal

NEW DELHI: Billionaire Rakesh Jhunjhunwala has questioned the recent deal between Fortis Healthcare and Manipal Hospitals and said the existing Fortis board does not have power to make the decision, according to recent news in ET.

In an interview, when questioned about opposing the deal, Jhunjhunwala told ET, “There is no question of opposing. First, let a stage come when the deal needs to be opposed. Today, it’s just an announcement. The board doesn’t have the power to do the deal…I think the stage where the deal will need to be voted upon will not come at all…A lot of shareholders have got in touch with me. I’ve given them the same views.”

Jhunjhunwala has said that the hospital chain should be sold through a fair process that allows all interested parties to bid. Jhunjhunwala holds less than 1 percent stake in the company.

Questioning the right of the board to approve and recommend the deal, Jhunjhunwala told ET, “The deal on behalf of Fortis hospitals has been approved by a board directors of which have been elected under the auspices of Mr Shivinder Singh and (his family). They are no longer the shareholders of this company.”

“What is the sanctity of a deal approved by aboard of directors appointed by a group of shareholders who are no longer shareholders of the company?” he further added.

“A fair deal only happens when the deal can be showcased to everybody,” Jhunjhunwala said.

Fortis has strongly disagreed with Jhunjhunwala's statement that the deal was not fair.

“We… hereby confirm that the board of directors are acting in their fiduciary responsibilities and in the best interest of company and all stakeholders,” a Fortis spokesperson told ET. “FHL has appointed Standard Chartered as its advisor to the deal and they have been working with us since more than a year. The current approval of the board is an outcome of a process of due diligence for more than a year and has been approved as optimal and definitive deal in hand.”

Fortis said it didn't receive any formal communication till date from minority shareholders with regard to the composition of the board that approved the deal.

The company has said it will secure in-prinicple approval of shareholders through a postal-ballot with e-voting facility and not an extraordinary general meeting.

“The process of printing notices, etc. is underway and the same is expected to be completed within a fortnight and the voting will start immediately thereafter,” the spokesperson told ET.

Jhunjhunwala is the first minority shareholder to publicly express his opposition to the Fortis deal that was announced last week after being in the works for more than 18 months.

According to the paper, several parties were interested in acquiring Fortis and IHH was also in the fray and had planned an open offer for shares in the open market.

According to a regulatory filing, East Bridge raised its stake to 9.73% from 5.87% on March 28, while that of Yes Bank is about 15%. BlackRock has a 5.01% stake reports ET.

Last week, Fortis Healthcare's board had approved the demerger of its hospitals business, which will be acquired by Manipal Hospitals and TPG Capital, along with the sale of 20 percent stake in its diagnostics chain SRL, in Rs 3,900-crore deal.