Fortis opts for Munjal-Burman offer in hospital takeover

Frederick Owens
May 12, 2018

"We hope that all Fortis shareholders can review the recommendation made by the board carefully, before making a decision", he said.

India's Fortis Healthcare has accepted an offer of investment from two prominent business families, picking an underdog in a five-way battle for a piece of the promising yet cash-strapped hospital operator.

Fortis Healthcare share price slipped almost 4 per cent on Friday after its board approved binding offer from Hero-Burman family offices.

As per the offer, Hero Enterprise and Burman Family Office will invest Rs 800 crore upfront through an issue of preferential shares for Rs 167 each.

He further said the company's proposal would have benefitted all Fortis stakeholders upon triggering a mandatory takeover offer outlined in its proposal. The group will put in another Rs 1,000 crore through warrants at Rs 176 per share. The Burman Family Office is the private investment arm of the company that owns Dabur India.

With the deal went into the lap of Munjal-Burmans, month-and-a-half-long bidding war comes to an end.

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Fortis had been a target of five firms and investment group as they bet on a rapid growth for the private healthcare market in Asia's third-largest economy - Malaysia's IHH Healthcare; businessmen Sunil Munjal and Anand Burman; Radiant Life Care, China's Fosun International and privately-held Manipal Hospitals. Except Fosun Health, four had made binding offer.

Shares of Fortis fell as much as 4.4% in early trading in Mumbai, compared with a 0.2% gain in the benchmark S&P BSE Sensex.

While Munjal is the president of Dayanand Medical College and Hospital in Ludhiana, the Burman family has healthcare enterprises such as Dabur Pharma and Healthcare at Home, reported Moneycontrol.

The Fortis management is likely to remain intact for some time as the investors would want to work with them for a period of time to understand the hospital business.

Currently, the company has 45 healthcare facilities (including projects under development), around 10,000 potential beds and 314 diagnostic centres in India, Dubai, Mauritius and Sri Lanka.

The consortium, which is the first to make a binding offer to Fortis, had initially valued the hospital business of the healthcare chain at Rs 5,003 crore in its offer on 27 March.

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