After a two-month battle, Fortis Healthcare on Monday beat a retreat from its bid to acquire majority control in Parkway Holdings. This, however, not without leaving its shareholders led by Malvinder Mohan Singh and Shivinder Mohan Singh richer by Rs 383 crore.
The move followed Malaysian Sovereign Fund Khazanah Nasional Berhad’s decision to raise its offer price from S$3.78 a share to S$3.95 a share for Asia’s largest health care chain.
Fortis, controlled by the Singh family, had offered S$3.80 a share to gain control of the Singapore-based firm.
The Indian company had emerged as the largest shareholder in Parkway after acquiring 23.5 per cent stake for S$1,000 million (over Rs 3,000 crore) in March. Khazanah will have to pay S$1,116 million (Rs 3,800 crore) to purchase these shares.
Fortis and Parkway chairman Malvinder Mohan Singh said the exit was “in the interest of all its shareholders”.
The Fortis management’s decision was welcomed by the markets, with the company’s share price rising 2.93 per cent to close at Rs 156.30 on the Bombay Stock Exchange. In intra-day trade, it had risen 6.8 per cent to Rs 162.20 — the highest in a month.
“It’s a good decision and it will definitely benefit the minority shareholders of Fortis. The profits gained (from the sale of shares) will come to Rs 8 per share, which is good gain for a five-month period,” said Ranjit Kapadia, vice-president, institutional research, at broking firm HDFC Securities.
Fortis Chief Financial Officer Yogesh Sareen said the decision will make Fortis debt free and leave it with surplus cash of Rs 900 crore. At the end of June, Fortis had net debt of Rs 2,930 crore with a debt-equity ratio of 0.7:1.
The stake sale has put an end to Fortis’ ambitious attempt to become Asia’s leading health care provider by leveraging Parkway strengths.
All Fortis nominees on the Parkway board, including Parkway chairman Malvinder Mohan Singh, will resign after Khazanah’s open offer comes to a close.
| THE FIGHT FOR PARKWAY | |
| 27 May: | Fortis acquires stake in Parkway |
| 11 June: | Khazanah makes formal bid for Parkway Holdings |
| 16 June: | Singapore gives Fortis Healthcare time until July 30 |
| 1 July: | Fortis Healthcare makes S$3.1 billion offer for Parkway |
| 9 July: | Khazanah extends Parkway offer deadline to July 26 |
| 23 July: | Fortis files complaint against Malaysia’s sovereign fund |
| 26 July: | Khazanah sweetens offer, Fortis decides to exit Parkway |
Fortis said its pan-Asia growth plans with Singapore as the hub remains unchanged. The company also indicated its plans to list Fortis in the Singapore Stock Exchange for securing more funds.
The battle for control over Parkway began on May 27, after Khazanah announced a conditional offer to acquire 51.5 shares of the company. Following Khazanah’s offer, Fortis and its promoters, the Singh brothers, made a counter offer on July 1.
Parkway Holdings, with a network of 16 hospitals of more than 3,400 beds, runs hospitals in Singapore, Malaysia, Brunei, India and China.
