Fortis Healthcare's board of directors on Thursday appointed an expert advisory committee, led by former Price Waterhouse and Coopers & Lybrand Chairman and Chief Executive Officer Deepak Kapoor, to take a call on the two binding offers — one by TPG-Manipal and another by Sunil Munjal (of Hero Enterprise) and the Burman family (of Dabur) — received by Fortis in the past few days. The committee is expected to submit its recommendation to the board on April 26, when the board meets again.
Fortis clarified it would consider all binding offers that come in by April 25. Standard Chartered Bank, the company's financial advisors, will assist the expert advisory committee and the board.
Fortis said it would call an extraordinary general meeting (EGM) to consider the demand for replacement of the existing board made by two large portfolio investors. East Bridge Capital Master Fund and Jupiter India fund, which own over 12 per cent shares in Fortis Healthcare, served notice on Wednesday for holding an EGM to select new board members.
The investors have demanded the appointment of Suvalaxmi Chakraborty and Ravi Rajagopalan on the board. They have sought Brian Tempest, Harpal Singh, Sabina Vaisoha and Lt Gen Tejinder Singh's removal.
Sunil Kant Munjal, chairman of Hero Enterprise, said they were pleased the Fortis Board found merit in their offer. "We believe that our offer is the most compelling and is better than 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," he said.
Drama in the Fortis deal saga continued till Thursday morning with revised offers coming in. The board received an unsolicited non-binding expression of interest from IHH Healthcare Berhad, which said it was ready to infuse Rs 40 billion at Rs 160 a share. This will fund the buyout of Religare Healthcare Trust assets as well as provide immediate liquidity towards working capital and infrastructure upgrades.
On the other hand, the Munjal-Burman duo upgraded their last week's offer of Rs 12.5 billion to Rs 15 billion. The revised binding offer includes an investment of Rs 5 billion through a preferential issue of equity shares and Rs 10 billion through preferential issue of warrants "based on the current business and financial position of the company as reflected in the company's various public filings". The Munjal-Burmans have waived off their demand for due-diligence, but now they have sought two board seats.
Over several months, a host of private equity firms and hospital chains have been on the lookout to acquire control of Fortis. Last month, Fortis and Manipal Hospitals announced a merger, thereby creating the largest provider of healthcare services in India in terms of revenue. It ran into rough weather with financial investors and hedge funds protesting at the valuation offered for the Fortis group's hospital business.
On April 10, Manipal revised the terms with a valuation of Rs 155 a share, which was 21 per cent more than the previous offer and proposed a Rs 40-billion rights issue after the merger.
Ranjan Pai, chairman of Manipal Education and Medical Group, said it was prudent on Fortis’ part to consider only the binding offers, as that would lead to a swifter closure of the deal. "Entertaining non-binding offers would have meant that the process would drag," he said, adding TPG-Manipal was happy to participate in the process.
Pai said since the shareholders had in the past questioned the intentions of the Board, this time the company's Board has chosen to appoint an independent committee to take a decision.
Fosun Health Holdings (FHHL), a wholly-owned subsidiary of the Hong Kong Stock Exchange-listed Fosun International, made a proposal of primary infusion at a price up to Rs 156 a share, up to a total investment of $350 million (Rs 22.75 billion) including a preliminary investment of up to Rs 1 billion.
Sources said IHH was mulling a hostile offer by going directly to the shareholders, and increasing its stake in the beleaguered hospital entity by buying from the open market. The same could not be confirmed.
Fortis clarified it would consider all binding offers that come in by April 25. Standard Chartered Bank, the company's financial advisors, will assist the expert advisory committee and the board.
Fortis said it would call an extraordinary general meeting (EGM) to consider the demand for replacement of the existing board made by two large portfolio investors. East Bridge Capital Master Fund and Jupiter India fund, which own over 12 per cent shares in Fortis Healthcare, served notice on Wednesday for holding an EGM to select new board members.
The investors have demanded the appointment of Suvalaxmi Chakraborty and Ravi Rajagopalan on the board. They have sought Brian Tempest, Harpal Singh, Sabina Vaisoha and Lt Gen Tejinder Singh's removal.
Sunil Kant Munjal, chairman of Hero Enterprise, said they were pleased the Fortis Board found merit in their offer. "We believe that our offer is the most compelling and is better than 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," he said.
Drama in the Fortis deal saga continued till Thursday morning with revised offers coming in. The board received an unsolicited non-binding expression of interest from IHH Healthcare Berhad, which said it was ready to infuse Rs 40 billion at Rs 160 a share. This will fund the buyout of Religare Healthcare Trust assets as well as provide immediate liquidity towards working capital and infrastructure upgrades.
On the other hand, the Munjal-Burman duo upgraded their last week's offer of Rs 12.5 billion to Rs 15 billion. The revised binding offer includes an investment of Rs 5 billion through a preferential issue of equity shares and Rs 10 billion through preferential issue of warrants "based on the current business and financial position of the company as reflected in the company's various public filings". The Munjal-Burmans have waived off their demand for due-diligence, but now they have sought two board seats.
Over several months, a host of private equity firms and hospital chains have been on the lookout to acquire control of Fortis. Last month, Fortis and Manipal Hospitals announced a merger, thereby creating the largest provider of healthcare services in India in terms of revenue. It ran into rough weather with financial investors and hedge funds protesting at the valuation offered for the Fortis group's hospital business.
On April 10, Manipal revised the terms with a valuation of Rs 155 a share, which was 21 per cent more than the previous offer and proposed a Rs 40-billion rights issue after the merger.
Ranjan Pai, chairman of Manipal Education and Medical Group, said it was prudent on Fortis’ part to consider only the binding offers, as that would lead to a swifter closure of the deal. "Entertaining non-binding offers would have meant that the process would drag," he said, adding TPG-Manipal was happy to participate in the process.
Pai said since the shareholders had in the past questioned the intentions of the Board, this time the company's Board has chosen to appoint an independent committee to take a decision.
Fosun Health Holdings (FHHL), a wholly-owned subsidiary of the Hong Kong Stock Exchange-listed Fosun International, made a proposal of primary infusion at a price up to Rs 156 a share, up to a total investment of $350 million (Rs 22.75 billion) including a preliminary investment of up to Rs 1 billion.
Sources said IHH was mulling a hostile offer by going directly to the shareholders, and increasing its stake in the beleaguered hospital entity by buying from the open market. The same could not be confirmed.
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