Another Crisis For Fortis: IHH audit committee Chief opposes deal
New Delhi: The planned acquisition of Fortis for Rs 4000 crores by IHH has now landed in another crisis as an independent non-executive director of IHH Healthcare had opposed the deal pointing it out risky.
ET reports that an independent non-executive director, who is also the Chairman of the audit and risk management committee of IHH opposed the planned acquisition of a controlling stake in Fortis Healthcare.
Medical dialogues had earlier reported that Fortis board had unanimously accepted a binding offer from Malaysia’s IHH Healthcare Berhad to invest Rs 4,000 crore in it by way of preferential allotment at Rs 170 per share.
All in all, IHH Healthcare is expected to shell out a total of Rs 7,300 crore to acquire a 57.1% stake, provided its open offer for 26 percent stake is fully subscribed. The Malaysian healthcare chain, which will gain majority control of India’s second-largest hospital chain, has already stated that in the long term it will rebrand Fortis hospitals into its own Gleneagles chain.
In a recent report, ET has reported that the opposition has come from Rossana Annizah Binti Ahmad Rashid, who is the independent non-executive director on the 11-member board and she made her dissent official in the meeting that approved the deal.
She is also chairman of the audit and risk management committee and a member of the nomination and remuneration committee of the board so her view is important.
ET reports that She “was not comfortable with the structure of the proposals after taking into consideration the risk factors related to the proposals and the qualified opinion issued by Fortis’ external auditors, Deloitte Haskins and Sells LLP, in the audited financial statements of Fortis for the year ended March 31.”
An IHH spokesperson told ET, “The board evaluated various factors to ensure a fair decision. One director concluded with a differing viewpoint. The final decision was taken by a majority, as per regulations, and the dissent was taken on record. As we understand, there is no connection between the view taken by an individual director of IHH and the forthcoming EGM (extraordinary general meeting) of Fortis as referred to by you.”
The Fortis EGM will be held on 13 August to seek shareholders vote for its acquisition by Malaysia’s IHH Healthcare.