A patient undergoes dialysis, aided by a Fresenius Medical Care AG machine, at a Fortis Healthcare India Ltd. (Photographer: Prashanth Vishwanathan/Bloomberg)

Manipal-TPG Group Revises Offer In Favour Of Fortis Healthcare

Manipal Heath Enterprises Private Ltd. has revised its offer to buy Fortis Healthcare Ltd.’s hospital business after consulting with shareholders who expressed dissatisfaction with the earlier offer.

Fortis received a binding offer from Manipal Health to revise the terms of the transaction, it said in a stock exchange filing. The new offer will be valid for seven days, it added.

What’s Changed?

  • “More favourable” swap ratio - Manipal Health revises Fortis Healthcare's hospital business valuation by 21 percent, from Rs 96.5 per share to Rs 116.90 per share
  • Manipal Health and TPG will not invest an additional Rs 3,900 crore in the merged entity Manipal Hospitals. Instead the merged company will do a rights issue of up to Rs 4,000 crore in which all shareholders can participate
  • SRL Diagnostics to remain a subsidiary of Fortis and may be merged into it on a later date thereby listing the diagnostics business separately

The original offer by Manipal was a two-step deal to first demerge Fortis’ hospitals business into TPG-backed Manipal Hospitals. Fortis would later divest stake in its diagnostics business to Manipal Health.

The second step of the earlier offer involved Manipal Health buying 50.9 percent stake in SRL Diagnostics. Of that, Manipal Health was to buy 20 percent stake for Rs 720 crore from Fortis and the other 30.9 percent from private equity investors.

Under the new offer, Manipal Health will not buy a 20 percent stake in SRL, which would continue to be a subsidiary of Fortis Healthcare. But Manipal Group Chairman Ranjan Pai will himself, or through firms he controls, buy 30.9 percent stake in SRL. After the demerger of the hospitals business, boards of the companies will consider a merger of Fortis and SRL.

A planned capital infusion of Rs 3,900 crore into the merged Manipal Hospitals – the resultant combined hospitals business – has also been called off by Manipal Health promoter Pai and TPG Capital. Instead, Manipal Health will look to undertake a rights issue for up to Rs 4,000 crore.

The share-swap ratio is also set to change. The valuation of Fortis’ hospital business has been increased 21 percent to Rs 6,061 crore. “This would result in a more favourable share exchange ratio for shareholders of Fortis Healthcare,” the filing said. Earlier every shareholder of Fortis was getting 10.83 shares in Manipal Hospitals for every 100 shares held.

Manipal-TPG Group Revises Offer In Favour Of Fortis Healthcare

The deal, which was announced last month, had faced opposition from minority shareholders of Fortis. Pai had told BloombergQuint that Manipal was in talks with the stakeholders and getting their feedback.

We hope our revised offer helps address the concerns of Fortis Healthcare’s stakeholders.
Manipal Health

Fortis' buyout offer comes at a time when founders Malvinder Singh and Shivinder Singh are battling allegations of siphoning funds from the hospital chain and non-bank lender Religare Enterprises Ltd., Bloomberg reported earlier. India’s fraud watchdog and stock market regulator are both investigating the company. The brothers stepped down from the boards of the two companies earlier this year.