KKR-backed Radiant Life Care Pvt. Ltd. revised its offer for Fortis Healthcare Ltd. after the board of India’s second-largest hospital chain decided it would only consider binding bids.
Radiant Life Care made a binding offer to buy Fortis’ hospital in Mulund in suburban Mumbai with an immediate equity infusion of Rs 680 crore, according to its letter filed with stock exchanges. This will include proceeds from the sale of 30.04 percent stake that Fortis holds in Religare Health Trust. The deal values the Mulund hospital assets at Rs 1,200 crore.
Abhay Soi, chairman and managing director of Radian Life said the company wanted to bid for the entire set of Fortis assets. However, since the struggling hospital chain is only accepting binding offers, they revised their bid to facilitate Fortis' cash needs.
We are suggesting that the Fortis board sell us one of their assets, and create the elbowroom to allow people to bid over the next three-four days.”Abhay Soi, CMD, Radiant Life
The new offer came the same day Malaysia’s IHH Healthcare Bhd revised its offer to make a binding bid. Last week, the Fortis board had set up an advisory panel to evaluate only binding offers for its healthcare and diagnostics business. At least five investor groups are eyeing to takeover Fortis after its founders Malvinder Singh and Shivinder Singh stepped down from the board amid allegations of siphoning funds. The troubled healthcare company has also received binding offers from Manipal Health Enterprise Pvt Ltd., and Burman and Munjal families. Chinese conglomerate Fosun International is also in the fray but with a non-binding proposal.
Radiant has also proposed a demerger of the hospitals business into a separate entity that will exclude the stake Fortis has in SRL. Radiant will then make an all-cash open offer to shareholders of the new company at Rs 126 apiece.
The open offer is subject to Radiant being able to acquire 26 percent or more stake in the new company. If it fails to do so, the new company would make a preferential allotment to Radiant at Rs 126 per share to enable it to hold 26 percent stake.
After that, Radiant proposed a rights issue by the new company to fund the RHT stake acquisition. The entire rights offer amount would be back-stopped by Radiant.
Radiant has also proposed that SRL be excluded from the main deal and sold via a competitive sale process to maximise returns for Fortis’ shareholders at an estimated equity value of Rs 4,000-4,500 crore. SRL could fetch Fortis shareholders an additional Rs 43.20-48.60 per share.
Aggregating the two, Radiant estimates that Fortis’ shareholders will get anywhere between Rs 170-175 per share.
Radiant’s offer does not restrict any interested bidder from putting in a bid with the maximum value after completing due diligence. The infusion of funds also does not limit the ability of other bidders participating in the second phase, its letter said.