Race to Acquire Fortis Healthcare Ltd Intensifies

The race to acquire Fortis Healthcare Ltd. has intensified with the extension of validity of joint binding offer of Hero Enterprise Investment and the Burman Family. The improved offer would be valid until May 4. The latest move comes on the heels of the target company’s board establishing an expert panel last week to assess different offers from bidding parties. That would allow them to come up with their final recommendation before April 26.

Valuation of Fortis

Hero Enterprise Investment Office and Burman Family Office have valued Fortis at Rs.161.6 a share. The improved bind offer’s total valuation is Rs.1,500 crore compared to its Rs.1,250 crore made earlier. The bidders have indicated that their enhanced offer would be valid only for five working days. However, they have extended this validity date of their binding offer; a BloombergQuint report said based on a filing by Fortis Healthcare. The Hero Group is led by Sunil Kant Munjal, who is in the automobile business, whereas Burman Family Office is the promoter of Dabur Group.

The two group’s investments arm told the target firm in their letter that after the advisory committee establishment, they have decided to extend their deadline. Their letter stated that “…we are hereby extending the validity period till May 4, 2018, or as otherwise extended by us in writing and the term of validity period in the improved offer letter should be construed accordingly.” The advisory committee is headed by former PricewaterhouseCoopers chairman and CEO India, Deepak Kapoor, who is also functioning as an advisor to the board.

The advisory panel’s other members are ICICI Venture’s former MD and CEO, Renuka Ramnath, and Society of Indian Law Firms and Managing Partner president, Lalit Bhasin. There are other bidders too in the race to acquire Fortis Healthcare. Malaysia-based IHH Healthcare Bhd, KKR-supported Radiant Life Care, Manipal Health Enterprises, and Chinese firm Fosun Health Holdings. There are only two binding offers, and that came from a consortium of Manipal-TPG and Munjal and Burman family offices.

Others like IHH Healthcare, Radiant Life Care, and Fosun Health Holdings’ have only submitted a non-binding expression of interests for the troubled firm. As far as TPG – Manipal consortium is concerned, it boosted their offer price to Rs.155 a share thus valuing its hospital business at Rs.6,061 crore compared to its initial offer of Rs.5,003 crore made on March 27.

Unsolicited Offer

Fosun Health Holdings, which is a unit of Fosun International, submitted an unsolicited, non-binding offer to Fortis Healthcare. The Chinese firm offered Rs.156 a share and a total investment of $350 million or Rs.2,295 crore. The Malaysian company has bid the Indian company at Rs.160 a share and lifted its proposal to inject Rs.4,000 crore by way of a preferential allotment of equity shares that will not exceed its offer price.

However, Radiant Life Care has preferred to buy a minimum of 26 percent stake in the target company at Rs.126 a share. This excluded SRL, a diagnostic business. India’s healthcare is expected to grow at a faster rate in the upcoming years. Aside from that, the government’s move to offer insurance will attract more buyers.

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