As competition heats up ahead of the Advisory panel meet today, Manipal -TPG improved its binding bid for Fortis Healthcare.
In what could be a compelling development for shareholders, Manipal proposed an open offer to public shareholders for buying 26% in the hospital business post its demerger.
The open offer price will not be less than Rs 121 per share for the hospital arm. Manipal also improved the hospital valuation to Rs 6,322 crore from Rs 6,061 crore for a more favourable swap ratio for Fortis, and values the company at Rs 160 per share.
It also offers to buy an additional stake of 5% in diagnostics company SRL to help Fortis meet its fund requirements.
Proposal stated that it had arranged a Rs 750 crore letter of intent (LOI) from ICICI Bank to provide immediate cash to company.
KKR backed Radiant Life Care also put in a binding offer for Fortis Health as the deadline for the bids ended.
Malaysian giant IHH also revised its offer to be eligible for the deal process. Manipal-TPG, Munjal-Burman had already been considered as their bids met the “binding bid” criteria.
Radiant has offered upfront amount of Rs 1,200 crore by buying Fortis Mulund asset.
The bid also states that the asset buy will not restrict any other bidder from participating in the process.
Rest of the offer for buying whole of hospital business including RHT is contingent on due diligence.
Radiant sought three weeks of due diligence for the rest of the offer to be binding in nature.
Diagnostics chain SRL is not part of the deal by Radiant. It proposes to spin off SRL and depending on the value the offer will give an implied value of Rs 170-175 per share for Fortis Healthcare.
Malaysian company IHH has also put in a binding bid offering to give Rs 650 crore, upfront and Rs 3,350 crore post due diligence.
Total offer by IHH stands at Rs 4,000 crore and it values the company at Rs 160 per share.
IHH in its offer has asked for three weeks of due diligence process before they can infuse the rest of the Rs 3,350 crore amount, they have also sought exclusivity of four weeks from the start of the due diligence exercise.
The company's offer seeks seats on the board of Fortis as part of the deal, and wants to complete a proper financial and legal due diligence process before they go ahead with the full transaction.
The Munjal-Burman offer is a binding bid with no requirement of a due diligence. The offers totals Rs 1,500 crore, out of which Rs 750 crore is upfront.
It’s Rs 1,500 crore offer is divided into two parts, a Rs 500 crore payment via preferential allotment of equity at Rs 156 per share, or a SEBI formula, whichever is higher.
The remaining Rs 1000 crore would be paid via a preferential allotment of warrants at Rs 161.60 per share, or a SEBI formula whichever is higher. They also seek two board seats for this deal to be sealed.
Sources suggest that Manipal-TPG has the “right to match” the highest bidder as part of the agreement with the board.
Fortis Healthcare has instituted an independent advisory board to evaluate the binding bids which will meet on April 25.
The healthcare company's board will meet on April 26 to take the decision. If Manipal exercises its right, it will need to be given 5 days for matching the highest bid, sources said.
Needs to be seen if Manipal-TPG will exercise its right to match. It will be interesting to see what the Fortis board decides, will it consider due diligence requests.
While TPG-Manipal, Munjal-Burman bids are definitive agreements without any requirement for due diligence, IHH & Radiant have proposed 3 weeks to counduct the diligence process for the deal to be firmed up.
While shareholders like East Bridge and Jupiter have sought to dismantle the present board of Fortis, proxy advisory firm IIAS has cried foul and questioned the entire sale process.
The advisory firm has pushed for a consideration of all the bids and lamented the widening trust deficit between the Fortis board and its shareholders, given this kind of pressure Fortis Board will have to tread cautiously.
All signals suggest a final outcome is unlikely on April 26. The street will take keen note of the developments at Fortis not only because of the deal considerations, but also the transparency, corporate governance and protection of minority shareholders’ right point of view.
It will be crucial to see if the board decision is palatable to the key shareholders whose votes will be the deciding factor for the finalisation of this deal.