Fortis Healthcare Ltd. is turning out to be a much-coveted asset with two bidders sweetening the terms of their offer and others converting their bids into partially binding ones to stay in the race.
In just over a month, the troubled healthcare company has received five offers after founders Malvinder Singh and Shivinder Singh stepped down from the board amid allegations of siphoning funds. They also lost shareholding control due to mounting debt and lenders invoking pledged shares.
The Fortis board meets on May 10 to consider binding offers. Here’s what’s on the table:
IHH, in its latest offer, raised its bid to Rs 175 per share and proposed an immediate equity infusion of up to Rs 4,000 crore, subject to completion of due diligence.
Earlier, the Malaysian healthcare company had made a binding offer to immediately infuse Rs 650 crore by way of a preferential issue and allotment of equity shares at Rs 160 per share in Fortis as part of an overall proposal to invest Rs 4,000 crore.
The Manipal Health and TPG consortium, which revised its offer on May 6, has proposed the merger of Fortis and Manipal Hospitals valuing the latter at Rs 8,358 crore. Manipal has offered to subscribe to Rs 2,100 crore of shares of Fortis via a preferential allotment at Rs 160 apiece. The South India-based hospital chain has also proposed to acquire stake held by private equity firms in Fortis' diagnostics arm SRL Ltd. at a price that values the subsidiary at Rs 3,600 crore.
The Manipal-TPG consortium had earlier valued the hospitals business of Fortis at Rs 6,322 crore. This included an immediate infusion of Rs 750 crore into Fortis via debt and a rights issue of up to Rs 4,000 crore at a price to be decided later.
Munjal And Burmans
Sunil Munjal’s Hero Enterprise Investment Office and the Burman Family Office, which jointly own a minority stake in Fortis, have committed to invest Rs 1,800 crore in the Indian healthcare chain without any due diligence. Of this, Rs 800 crore will be infused through a preferential issue at Rs 167 a share while the rest will be invested through warrants at Rs 176 a share.
Including the warrant subscription amount, their upfront investment would be Rs 1,050 crore, the joint bidders told Fortis. The offer is valid until May 15.
The entity has also recommend divesting Fortis’ stake in SRL Diagnostics to fund the buyout of Religare Healthcare Trust Ltd’s assets. If the SRL stake sale does not happen, the offer proposes a rights issue for acquisition of RHT stake.
Munjal and the Burmans’ first offer for Fortis was made at Rs 1,250 crore which was subsequently revised higher to Rs 1,500 crore and now stands at Rs 1,800 crore.
Radiant Life Care
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. 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.
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 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 has 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 them an additional Rs 43.20-48.60 per share.
Aggregating the two, Radiant estimates that Fortis’ shareholders will get anywhere between Rs 170 and 175 a share.
Fortis also received a non-binding offer from Chinese conglomerate Fosun International, which will not be under the board’s consideration today.
As part of the offer, Fosun plans to infuse up to $350 million (approximately Rs 2,300 crore) at Rs 156 per share. It will inject Rs 100 crore within the 45 days since the offer was made. That includes an option of immediately subscribing to convertible debt instruments of the company. The Rs 100-crore infusion will be on the condition that Fortis agrees to a one-month period of exclusivity for Fosun to undertake due diligence and negotiate a proposal to acquire stake in the company.