Fortis Healthcare today said its board has picked Malaysia's IHH Healthcare to take control of India's second-largest hospital chain, ending months of takeover battle.
Fortis board picked up IHH offer to infuse Rs 4,000 crore of capital by way of subscription to preferential shares, over rival TPC-Manipal consortium's offer that included Rs 2,100 crore infusion and merger of Manipal Hospitals with Fortis Healthcare.
IHH, which will get 31 per cent stake in Fortis Healthcare through the preferential allotment of shares at Rs 170 apiece, will make an open offer for an additional 26 per cent at the same price. The open offer will cost another Rs 3,300 crore.
The offer price is about 20 per cent higher than Fortis' closing price on Thursday.
Based on the offer price of Rs 170 per share, the implied equity valuation for 100 per cent of Fortis Healthcare is Rs 8,880 crore (RM 5.2 billion).
"The transaction is expected to be completed within 7 business days of receipt of shareholders' and CCI's approval, which will be obtained concurrently with shareholders' approval and can take approximately 60-75 days," Fortis Healthcare said in a statement.
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Fortis said the proposal offers significant deal certainty given a "simpler" transaction structure and requirement for fewer approvals and a shorter time frame.
This also provides an exit opportunity for shareholders through the open offer, in case they desire, the company said.
"In terms of next steps, the company will call for a shareholder's meeting at the earliest and look forward to shareholder's approval," it said.
IHH Managing Director and CEO Tan See Leng, said the acquisition would significantly increase the company's reach across the Indian subcontinent, complementing its existing capabilities in the high-value quaternary care segment.
"IHH has already been actively expanding and deepening our presence in our home market of India over the last few years and this acquisition is a natural progression in our expansion and plans across India," he added.
Leng further said,"With a clear and holistic strategy in place, we have developed a 100-day turnaround plan to stabilise Fortis."
IHH's offer includes "funds infused to be used towards completion of the acquisition of assets of RHT, SRL private equity minority shareholders and short-term liquidity needs."
Fortis Healthcare Chairman Ravi Rajagopal said, "The IHH proposal offers a more strategically and financially compelling proposition along with simplicity and certainty."