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| Fortis acquires 10 Wockhardt hospitals |
| BS Reporter / New Delhi Aug 24, 2009, 17:20 IST |
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Fortis Healthcare, the leading private healthcare chain promoted by the erstwhile owners of India’s largest drug firm Ranbaxy, has acquired the cream of rival Wockhardt Hospital chain’s assets – eight running hospitals and two green field projects - for Rs 909 crore. This includes Rs 190 crore towards capital work in progress for projects under construction.
Considering the fact that the per bed cost for a green field tertiary hospital is estimated to be Rs 60 lakh, the deal which would see Fortis adding 1902 beds, is quite a steal, analysts feel. The acquisition will see Fortis inching closer to the country’s largest hospital network Apollo on total bed strength. While Apollo has over 7,000 beds, Fortis, post acquisition will have 5180 beds in 38 hospitals.
The deal will be EPS accrual from the first year onwards. Fortis share price rose 6.57 per cent to close at Rs 116.05 at Bombay Stock Exchange(BSE) today.
Post consummation of this deal, Fortis will rank as the leading private healthcare provider in several key states in India, including Delhi, Maharashtra, Karnataka, Punjab, Haryana, Rajasthan and Uttar Pradesh.
The deal, biggest ever in Indian healthcare space, will provide Fortis with a mix of big and small hospitals, including two multi specialty hospitals with the coveted Joint Commission International (JCI) accreditation. The top management of Wockhardt Hospitals – including its CEO Vishal Bali – will also move to Fortis fold after the acquisition.
The acquisition marks Fortis’ expansion into the South, West and Eastern regions of the country. Of the 10 hospitals, two are in Mumbai, five in Bengaluru and three in Kolkata.
“The deal will make Fortis very strong in Mumbai and Bangalore, the two cities where it did not have a strong presence. Wockhardt’s Mumbai hospital is running well and has an occupancy rate of over 80 per cent with steady cash flow. The Bangalore hospital is also functioning well”, Monika Sood, Feedback Ventures Pvt Ltd said.
The combined network is expected to benefit from the economies of scale specifically in the areas of purchase and supply management, brand marketing, training & development and implementation of projects.
Prior to this deal, the largest healthcare acquisition was of Escorts Heart Institute, also acquired by Fortis Healthcare ltd in the year 2005.The Escorts-Fortis deal size was Rs 650 crore.
The deal leaves Wockhardt with 10 hospitals including seven super specialty hospitals Rajkot, Surat, Nasik, Nagpur and Hyderabad. In most cases, these hospitals are run by Wockhardt, but not owned by them.
Wockhardt Chairman Habil Khorakiwala stated that “Wockhardt Hospitals will continue on its journey of growth which would include a state-of-the-art multi-speciality hospital in Mumbai Central within a year.”
The sale of asset for Wockhardt chairman became a necessity due to the losses made by the group flagship pharmaceutical company Wockhardt Ltd. On the other hand, the acquisition became smooth for Fortis as its promoters had sold their stake in Ranbaxy.
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