Munjal-Burman combine withdraws Fortis offer, gives consent for rebid

The move paves the way for the board to call for fresh bids in its next meeting on Wednesday.

The Hero Enterprise-Burman family combine has withdrawn its binding offer to take over Fortis Healthcare and given its consent to the hospital chain’s board to reopen the bidding process. The combine has expressed disappointment over the board’s indecision and lack of support from certain shareholders for their Rs 18 billion investment proposal.

The move, which comes within days of shareholders voting out director Brian Tempest from the Fortis board, paves the way for the board to call for fresh bids in its next meeting on Wednesday. Three other ex-promoter-appointed directors, who had supported the Hero-Burman proposal, had resigned before the shareholders’ vote.

The consortium, whose offer was selected by the Fortis board on May 10, said it had given its consent for reopening bids to expeditiously complete the fundraising process.

The Manipal Hospitals-TPG combine has already revised its bid for Fortis, offering Rs 180 per share, after the May 10 decision. Both Manipal and Malaysian hospital chain IHH Healthcare have extended the validity of their bids. “We would like the board to allow us and other bidders an opportunity to carry out due diligence. Any decision on reviewing offer could be made post due diligence,” said Abhay Soi, chairman of Radiant Life, one of bidders. 

“We expect that any such (rebidding) process will be run in a fair and transparent manner, with full clarity to all stakeholders and bidders....We wish to express our continued belief in the company and will be keenly interested in evaluating our participation in any such process,” Sunil Kant Munjal of Hero Enterprise and Anand Burman of the Dabur group wrote in a joint letter to the Fortis board on Monday.

The duo also expressed anguish as they were expecting the board to circulate their investment proposal for shareholders’ nod. 

“It appears there may be indecision on the part of the company regarding the bid process which we understand could be on account of a few shareholders indicating their preference to the company for reopening the bid process,” they said.

Hero Enterprise-Burman family had offered to invest Rs 18 billion in Fortis through a combination of preferential equity and warrants. Their offer valued Fortis at over Rs 90 billion, or around Rs 172 per share. 

The duo had proposed an upfront infusion of Rs 10.5 billion directly into Fortis. The remaining Rs 7.5 billion was to be infused into the company over the next four months. They had also sought three seats on the Fortis board. Besides, they had proposed a strategic sale of SRL Diagnostics after divesting Fortis Healthcare’s stake in it.
 

        Twist in the tale

• May 10: Fortis board selects Hero Enterprise-Burman family's Rs 18 billion investment proposal
• May 14: Manipal Hospitals-TPG submits fresh bid, offers Rs 180 per share for stake in Fortis
• May 21: Three Fortis board members resign ahead of extraordinary general body meeting to decide their fate
• May 22: Shareholders vote out director Brian Tempest
• May 28: Hero-Burman gives consent for re-opening bids