The battle to take control of Fortis Healthcare Ltd has intensified following the entry of Radiant Life Care Private Ltd, which is backed by KKR. It is quite obvious that everyone is trying to take advantage of the current market position in the healthcare segment, which is witnessing strong growth. The interest for the company has grown after the government announced its plan of ‘Modi-Care’ that is much like the ‘Obama Care’ in the United States.
The new entrant has come out with a non-binding offer to acquire more than 25 percent stake in the cash-strapped Fortis Healthcare Ltd. In a filing, the company has also attached the offer letter. The bidder has expressed its desire to acquire a minimum of 26 percent stake and willing to buy more also. However, it is not the only firm to have shown interest and the fifth to indicate its willingness to restructure the company completely. Reacting to the news, Geojit Financial Services’ investment strategist head, Gaurang Shah believes that there could be more revised offers coming in the upcoming days.
Fortis Healthcare Ltd has announced that it will form an advisory committee. The committee will analyze binding and non-binding bids from the suitors, and it is expected to come out with its recommendations before April 26. The board will then take a call as to which way it should move forward. In any case, the latest offer failed to have a big impact on the company’s stock prices.
Currently, there are four other bidders to Fortis Healthcare. The company has been plagued with one or the other issues in the past. The non-binding offers came from China-based Fosun International and Malaysia-based IHH Healthcare. The other two offers were binding. Its rival from the domestic circuit, Manipal Health Enterprises and a consortium of two popular Indian business families, i.e., the Burman Family Office and Hero Enterprise.
It appears that there was not much difference between the bidders, Reuters reported, as the range of bidding was between $1.2 and $1.4 billion only. At the current market price of NSE’s Rs.149.55, it represented a discount of about 34.7 percent from the 52-week high price of Rs.228.95 seen on May 3 last year. However, it enjoys a premium of 39.6 percent from the one-year low price of Rs.107.10.
Spin-Off Hospital Unit
According to the proposal, Radiant plans to spin off the hospital unit from the bigger Fortis Healthcare to create a fresh company that excluded Fortis stake in SRL Ltd., an Indian Diagnostics chain. The offer price of the bidder is Rs.126 in cash to shareholders in respect of the new company. This meant that the bidding price for the whole of the company worked out to Rs.165 a share or about $1.3 billion that included a stake in SRL.
Fortis is running approximately 30 hospitals in India that offered interests to potential bidders as the demand for private healthcare soared. Aside from that, interest for healthcare sector got a big boost after Prime Minister, Narendra Modi, intends to execute a program offering insurance to nearly half of the population in India.