A member of medical staff secures his face mask inside a operating theater at a hospital in Birmingham, U.K. (Photographer: Matthew Lloyd/Bloomberg)

Fortis Scraps SRL Diagnostics, Fortis Malar Merger Scheme

Fortis Healthcare Ltd. has said it is withdrawing the scheme of amalgamation between Fortis Malar Hospitals and SRL Diagnostics due to the delay in completion of the process and strong headwinds in the sector.

“The entire process was expected to take 6-8 months. However, due to reasons beyond the company’s control, the process has taken over 19 months and is still not complete,” Fortis said in a late night filing yesterday.

The scheme is currently pending approval from the National Company Law Tribunal, Chandigarh bench, it added.

During this period of 19 months, the healthcare sector has witnessed strong headwinds and performance of diagnostics business has not been optimum, Fortis Healthcare said. “Given the challenges/headwinds in the sector and less than optimum performance of the diagnostics business during the period of delay, the demerger and a subsequent listing may result in value unlocking that may not be optimum for Fortis shareholders at this point of time,” it added.

The board has approved the withdrawal of the composite scheme of arrangement and amalgamation between the company, Fortis Malar Hospitals Ltd. and SRL Ltd., subject to the approval of the NCLT, Fortis Healthcare said.

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On Aug. 19, 2016, the board of Fortis had approved a proposal to demerge its diagnostics business, including that housed in its subsidiary SRL Ltd. into another majority-owned subsidiary, Fortis Malar Hospitals pursuant to a composite scheme of arrangement and amalgamation.

As part of the process, Fortis Malar was to sell its hospital business to Fortis Healthcare by way of a slump sale for a lump sum cash consideration of Rs 43 crore. The cash-strapped healthcare provider in May-end decided to initiate a fresh, time-bound bidding process for the company.

Shares of Fortis Healthcare Ltd. were today trading at Rs 136.95 per scrip on BSE, down 0.90 percent from its previous close.

Also read: Fortis Healthcare Board Defers Approving Financial Results Again