(Bloomberg) -- IHH Healthcare Bhd. is preparing to formally approach India’s Fortis Healthcare Ltd. with an offer for the hospital operator that will put it in competition with a TPG-backed firm, people with knowledge of the matter said.
IHH, Southeast Asia’s largest hospital operator, aims to send a letter to the Fortis board within the next couple of weeks about its plans to bid for the Indian company, according to the people. The Kuala Lumpur-based company is contemplating a cash offer for Fortis, which has a market value of about $1.2 billion, the people said, asking not to be identified because the information is private.
It would be the latest twist in the Fortis saga, with India’s fraud watchdog and stock regulator investigating the company after Bloomberg News reported the company’s founders took at least 5 billion rupees out of the firm without board approval. Brothers Malvinder Singh and Shivinder Singh have resigned from the company and have lost control of their shareholding due to mounting debt.
IHH is currently discussing the potential level of the bid, the people said. If the approach is rejected by the Fortis board, IHH will consider taking its offer directly to the Indian company’s shareholders, according to the people.
Any offer would put IHH in competition with TPG-backed Manipal Health Enterprises Pvt, which on Tuesday unveiled a sweetened bid for Fortis’s hospital operations after opposition from some investors. Manipal’s new offer values Fortis at 155 rupees ($2.4) a share, up from 140 rupees earlier, Ranjan Pai, chairman of Manipal Education and Medical Group, said in an interview Wednesday.
Manipal has put its “best foot forward” with the revised bid, said Pai. “I hope it’s a binding bid, good luck to them,” he said of the competing offer.
Shares of Fortis advanced 0.7 percent to 147.65 rupees in Mumbai, after climbing as much as 3.9 percent.
No final decisions have been made, and there’s no certainty IHH will proceed with a formal bid, the people said. A representative for IHH declined to comment, while a spokesman for Fortis said he couldn’t immediately comment.
Fortis, India’s second-largest private hospital chain by market value, is attracting interest as bidders see opportunities in providing health care to an increasing number of affluent Indians and as the government prepares to provide poor families free access to medical facilities.
“Shareholders should first of all wait and watch, let things crystallize, and choose the best offer,” said J.N. Gupta, managing director of proxy advisory firm Stakeholders Empowerment Services. “It will be an interesting battle to watch because it will get the best value for shareholders.”
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