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Manipal Health’s Revised Bid Offers Greater Value To Fortis Shareholders, Says Chairman

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TPG-backed Manipal Healthcare Enterprises Pvt Ltd.’s latest bid for Fortis Healthcare Ltd. will be more rewarding for shareholders as it comes with a concrete merger plan and higher valuations.

That’s according to Manipal Health Chairman Ranjan Pai. Manipal’s existing record of running hospitals in India means more synergies for the merged entity of Manipal and Fortis and gives it an edge for the Munjal-Burman offer, he told BloombergQuint in an interview.

Given our track record in running hospitals in India, we felt that we had a lot more to offer shareholders in terms of the proposed merger. I think the Fortis board will have to take this offer, as it’s the best on table right now.
Ranjan Pai, Chairman, Manipal Health

The TPG-Manipal consortium revised its offer for the troubled healthcare chain for the third time yesterday, after Fortis’ board backed a joint bid from the Munjal and the Burman families. Under the new offer, Manipal proposed to infuse Rs 2,100 crore at Rs 180 apiece through a preferential allotment. 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.

Also Read: Fortis Opts for India Tycoons Over TPG, KKR in Hospital Deal

Pai said many of Fortis’ shareholders are unhappy with the offer proposed by the Munjal-Burman combine, even as he declined to name any of them.

Manipal’s latest offer, on the other hand, is less complex than previous ones and will ensure greater liquidity to the troubled healthcare chain, he said. The proposed merged entity can deliver an operating profit of Rs 200 crore following the deal, he added.

The battle for Fortis takeover has been on for nearly two months now. It seemed to inch closer towards a conclusion after board of directors last week recommended 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, bringing the total infusion to Rs 1,050 crore.

Also Read: How Fortis Went From Portfolio Investment To Takeover Target For Burmans

Watch the full conversation here:

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