TPG-Backed Manipal Health Revises Its Offer For Fortis Again

TPG Capital-backed Manipal Healthcare Enterprises Pvt Ltd. today revised its offer for Fortis Healthcare Ltd. for a third time even as the board of India’s second largest hospital chain has already backed a joint bid from the Munjal and the Burman families.

Under the new offer, Manipal will infuse Rs 2,100 crore at Rs 180 a share through a preferential allotment, Fortis said in its filing to the stock exchanges. While the total amount of short-term funding hasn’t changed, the price has risen from Rs 160 in the previous offer. That increased the valuation of Fortis to Rs 9,403 crore compared with Rs 8,358 crore earlier.

The rest of the structure of the deal stays unchanged, the filing said.

The takeover battle for Fortis, that's been on for nearly two months now, drew closer to conclusion after the board of directors last week decided to recommend a joint bid from the Munjal and Burman families. They have committed to invest Rs 1,800 crore, of which Rs 800 crore will be infused through a preferential allotment at Rs 167 a share. The rest would be through a warrants issue at Rs 176 a share, with Rs 250 crore funded upfront. That’s a total infusion of Rs 1,050 crore.

This offer will be placed before the shareholders for their approval.

The Fortis board had backed the Munjal-Burman bid as it was “the only binding offer which is ready to infuse money in to the business straight away”, according to Mohit Burman, a member of the Burman family. In an interview with BloombergQuint, Burman had said the earlier Manipal Health offer did not provide immediate liquidity and involved a demerger of the hospitals business which could take up to a year.

In its offer, the Ranjan Pai-led Manipal Health said that the Munjal-Burman bid “only partially solves the short-term liquidity concerns of Fortis and fails to deliver any long term benefits”. It does not solve the “larger issue” of Fortis’ acquisition of Religare Health Trust Ltd.’s assets, Manipal Health said. It added that private equity investors in the diagnostics business SRL Ltd. don’t get an exit route through the Munjal-Burman offer.

Manipal Health claimed that the merged entity (of Fortis and Manipal Health) could deliver an additional operating profit of Rs 200 crore per annum and add an additional Rs 50 per share value for the stakeholders.

The new offer is binding and will be valid til May 29.