MUMBAI: A bidding war is expected to start soon for acquiring controlling stake in Fortis Healthcare Ltd as IHH Healthcare Berhad is set to launch a voluntary open offer to buy the non-promoter shares of Fortis Healthcare in the next few days, according to a recent report in Economic Times.
A Voluntary Open Offer is an open offer given by the acquirer voluntarily without triggering the mandatory open offer obligations as envisaged under SEBI (SAST) Regulations, 2011.
The hospital has been without a definite promoter ever since the shareholding of founders Malvinder and Shivinder Singh dropped following the sale of their pledged shares by some lenders in February.
The step by IHH health is expected to initiate a bidding war with TPG- Manipal Hospitals combine as both the sides are trying to acquire a controlling stake of 51 percent in the company.
Currently, 80 percent of Fortis’s shares are with the public while 20 percent of pledged promoter’s shares are held by lenders Yes Bank Ltd and Axis Bank Ltd. Yes Bank has emerged as the single largest shareholder with a 17.03% stake in India’s second-largest private hospital chain.
As per the news report, Manipal is believed to be working with Kotak Mahindra for the deal while IHH has appointed investment bank Citi for the advice on the deal and is preparing a 1 billion dollar war chest to fund the share purchase. The current market cap of Fortis is Rs 7,909.52 crore
Sources told ET that IHH is unlikely to seek to acquire the promoters’ shares for now.
For both TPG-Manipal and IHH, a potential buyout of Fortis is likely to close at a significantly lower price than what they were previously negotiating with the Singh brothers. In June last year that the IHH Healthcare, was close to buying 26% in Fortis from Malvinder and Shivinder Singh at a $2.9 billion valuation for Fortis and unit SRL Diagnostics reports Mint.
The transaction did not go through following a court ruling that stayed the sale of unencumbered assets of the Singh brothers.
However, the report stated that it is not clear yet if IHH will wait for the Law firm Luthra and Luthra report.
Law firm Luthra and Luthra, which was roped in by the board-run company’s audit and risk-management committee, is expected to table a report on Fortis’s treasury operations, inter-group and related-party transactions, allegations of the Singh brothers siphoning off money, and other clauses. Previously, auditor major Deloitte said it cannot comment on the company’s financials.
A company spokesperson told ET, “IHH Healthcare does not comment on market speculation. We will update the market if there are any material developments.”