Manipal-TPG revises offer for Fortis, raises value to Rs 83.58 billion

Manipal's Ranjan Pai says the offer brings in value worth Rs 90 bn

Further, Manipal proposed to buy the stakes held by private equity firms in SRL, the diagnostic arm of Fortis Healthcare, at Rs 36 billion. After the transaction, the SRL board will be restructured and Manipal-TPG wants to appoint a majority of directors on the reconstituted board.

After the merger, Fortis will undertake a rights issue to raise additional capital. The purchase of the Singapore-based RHT's assets will be funded through debt, apart from the proceeds from the preferential allotment. 

Manipal-TPG, however, has said their new offer does not require any further due diligence. The proposal is binding and valid until May 15. This is the fourth offer from Manipal-TPG for Fortis. 

Ranjan Pai, managing director and chief executive officer, Manipal Health Enterprises, said this was a ‘compelling offer’ from their side that took care of all the medium- to long-term needs of Fortis and created value for the shareholders. “We are bringing in value addition of about Rs 90 billion and that too without altering any structure of the Fortis,” he said, adding that the latest offer from Manipal-TPG not only takes care of the immediate liquidity issue of Fortis but also takes care of the PEs in SRL (which is a liability for SRL), buy back the RHT assets (organise debt for the transaction if required), gives an opportunity to shareholders to participate through a rights issue. “On top of it, it gives Fortis a promoter. It needs one at the moment, unlike many other bidders, who are looking at simple fund infusion,” Pai said. 

Bidding for Fortis closed on May 1. Manipal Hospitals, however, had a chance to revise its offer until May 6, based on the bids received till May 1. This is as per ‘obligations’ towards Manipal-TPG consortium, Fortis had said.

Last week, IHH had submitted a revised offer, valuing Fortis at Rs 175 per share, up from its earlier offer of Rs 160 per share. Sunil Kant Munjal of Hero Enterprise, along with Anand and Mohit Burman, submitted a revised binding proposal to invest Rs 18 billion directly into Fortis without due diligence.

The Hero Enterprises-Burman Family office duo have also revised the validity of its offer till May 15 and have now sought three board seats instead of the two. 

The Munjal-Burman has also objected to the bidding process and has asked for an equal opportunity to all bidders without any unfair advantage to one party. 

Fortis has appointed Arpwood Capital to advise the board on various sale bids.