Fortis Update: Radiant makes offer, Fortis forms new panel to decide proposals

New Delhi: With four suitors in race, Fortis Healthcare board approved evaluation of only binding offers and formed an expert committee to evaluate the proposals 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.

The Manipal/TPG led consortium had raised their offer for Fortis last week to Rs 155 per share by valuing the hospital business higher at Rs 6,061 crore from Rs 5,003 crore in its initial offer on March 27.

On the other hand, this morning Hero Enterprise Investment Office and Burman Family Office made an improved offer by willing to invest Rs 1,500 crore directly at a valuation of Rs 161.6 per share from the earlier Rs 1,250 crore.

Malaysia's IHH Healthcare, which had last week offered to acquire stake in the Indian firm at Rs 160 per share, also upped the ante by proposing to infuse Rs 4,000 crore through a preferential allotment of equity shares at a price not exceeding its offer share price.

Fortis Healthcare had also received an unsolicited non-binding expression of interest from Fosun Health Holdings Ltd, an arm of Fosun International Ltd, with a proposal of primary infusion at a price up to Rs 156 per share up to a total investment of USD 350 million (over Rs 2,295 crore).

In its statement, Fortis said the advisory committee will be chaired by Deepak Kapoor, former chairman and CEO of PwC India.

In order to evaluate the binding offers, the advisory committee will, after due evaluation and post taking into account the independent view of Standard Chartered Bank, make a final recommendation to the board by April 26, 2018, it added.

On the basis of the decision by the board, the final proposal will be put forward to the shareholders for their approval, it added.

In a joint statement, the board of directors of Fortis said the company has over the past many months been involved in deliberations for a potential transaction with the objective of partnering with strong players that would help it strategically and financially before entering into a transaction with Manipal/TPG consortium on March 27, 2018.

The company has been facing hurdles that have precipitated and caused uncertainty and ambiguity amongst all stakeholders, they added.

"We firmly believe that it would be the responsibility of the board to direct and guide the company in a manner that brings conformity and certainty to the ongoing process...We are confident that at the end of this process, we would have enabled the company in meeting its long-term objectives of growth, profitability and shareholder value enhancement," they added.

Reacting to the development, Hero Enterprise Chairman Sunil Kant Munjal said, "We are pleased to note that the board of Fortis Healthcare has found merit in our offer, which is simple, binding and is the quickest to implement."

He further said, "We believe that our offer is the most compelling and is significantly better than any other options being explored by the company. We believe that this is the only offer which is in the best interest of all stakeholders of Fortis."

The healthcare chain also said its board also took note of the requisition made by a group of shareholders, including National Westminster Bank Plc and East Bridge Capital Master Fund seeking removal of four directors from the board.

The shareholders, 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 extra-ordinary general (EGM) meeting.

They have sought appointment of Suvalaxmi Chakraborty, Ravi Rajagopal, and Indrajit Banerjee as independent directors on the company's board.

The board has "directed the management to organize the EGM at the earliest possible post completion of all administrative formalities", the statement said.

The Fortis board also approved the appointment of Rohit Bhasin as an additional director (independent) of the company with immediate effect for a period of five years, subject to shareholders approval.

The takeover battle for Fortis Healthcare Ltd intensified after KKR-backed Radiant Life Care Private Ltd entered the fray on Thursday with an offer to buy more than a quarter of the cash-strapped company’s hospital business.

In its non-binding offer, Radiant has proposed to make an investment and/or re-structure Fortis Healthcare, Fortis said in a statement.

Radiant is interested in participating as a strategic investor in Fortis, it said in a letter to the hospital operator.

Radiant, the fifth suitor, proposed a demerger of the hospital from Fortis Healthcare (FHL) into a new company, excluding FHL’s stake in Indian diagnostics chain SRL Ltd.

The all-cash offer to shareholders of the proposed new company will be at a net value of 126 rupees per share, Radiant said.

The offer is contingent on, among others, Radiant being able to buy 26 percent or more shares of the proposed new company, it added.

Fortis Healthcare said earlier it would set up an advisory committee to evaluate binding offers from suitors lining up to buy the company or take a stake.