Fortis Healthcare on Thursday decided to recommend the binding offer of Hero Enterprise Investment Office (Hero) and the Burman Family Office (Burman) for shareholder’s approval as recommended by the Expert Advisory Committee (EAC), the company said in a statement.
"The Board of Directors of Fortis Healthcare Limited has decided by majority to recommend the binding offer of the Hero and Munjal consortium," reads the statement.
The deal will infuse Rs 800 crore through a preferential allotment of equity shares at Rs 167 per share and a preferential issue of warrants of Rs 1,000 crore at Rs 176 per share or as per SEBI ICDR guidelines whichever is higher.
The consortium-led by Sunil Kant Munjal of Hero Enterprise and the Burman family of Dabur submitted a binding bid to invest Rs 1,800 crore in Fortis with Rs 1,050 crore upfront. It also offered to divest diagnostic unit, SRL, through an independent valuation. They are planning to buy out RHT Holding using funds from SRL.
"The entire exercise involved a process that witnessed deliberation and recommendation by an Independent EAC comprised of Deepak Kapoor, former chairman of PWC (India) and Lalit Bhasin, chairman of the Indian Society of Law Firms along with two financial advisors from Standard Chartered Bank and Arpwood Capital and Cyril Amarchand Mangaldas who were the legal advisors," the satetment said.
“We are delighted that the Board has accepted our offer, which is, unarguably, the best solution," said Munal. "We are sure that the shareholders will see the intrinsic value in our proposal and repose confidence in us."
Fortis is a national healthcare asset, which has a good spread across the country and the consortium will help the company become what it ought to be, said Burman.
"Going forward, the immediate plan of action for the company should be to build on its strengths, retain talent, expand business, and institutionalise processes at Fortis,” He said.
Fortis received four binding bids from Manipal-TPG, businessmen Sunil Munjal and Anand Burman, IHH Healthcare of Malaysia and Radiant Life Care, backed by buyout company KKR. China’s Fosun International submitted a non-binding bid.
The Manipal-TPG consortium revised their offer on May 6, proposing to infuse Rs 2,100 crore into the company at a price of Rs 160 per share.
The last date for the submission of the final bids was on May 1. The Manipal Hospitals-TPG consortium, one of the first bidders for the hospital, was exempted from the deadline and had until May 6 to match any new bids received until May 1.
Malaysia-based IHH Healthcare had offered a binding bid of Rs 650 crore at Rs 175 per share for Fortis. Its offer to infuse Rs 3,350 crore at up to Rs 175 per share is subject to due diligence.
Mumbai-based Radiant Life Care, backed by buyout firm KKR, entered the fray as the fifth bidder. It proposed a binding bid to buy Fortis’s Mulund Hospital at a value of Rs 1,200 crore.
Of the five companies, China-based Fosun International is the only company that offered a non-binding bid. The company offered, $350 million, or Rs 23,38 crore, for 25% of Fortis with an immediate infusion of Rs 100 crore.
Malvinder Singh and Shivinder Singh own Gurugram-based Fortis Healthcare, which owns 34 hospitals and medical facilities across 10 states with a total of 4,445 beds.
The Singh brothers took out Rs 500 crore from the publicly traded hospital company they control without board approval about a year ago.
Fortis owns 29.8% stake in RHT Health Trust (RHT), the Singapore-listed entity that owns assets in 12 of the hospitals that Fortis operates. Fortis also owns 56.6% stake in SRL Diagnostics.
Read our comprehensive coverage of the deal here.