Wockhardt in advanced talks with Fortis to sell 2-3 hospitals

Deal is yet to be sealed as differences persist over valuation

Pharmaceutical major Wockhardt, which is trying to repay debts worth over Rs 3,400 crore, is in negotiations with prospective investors for immediate sale of two-three of the 12 hospitals promoted by Chairman Habil Khorakiwala.

The group had earlier tried to sell a minority stake in the hospital chain to raise funds, but that plan didn't work out as investors were more keen on a majority stake. The latest negotiations, sources familiar with the developments said, were being carried out to meet the investors' demand half-way.

Sources also said the company was in advanced stages of talks with former Ranbaxy owners Malvinder Mohan Singh and the Shivinder Mohan Singh-promoted hospital chain Fortis Healthcare to sell at least two to three hospitals. Two of the hospitals under discussion are located in Mumbai, while one is in Bangalore. However, the deal was yet to be finalised as there were differences over valuations as Wockhardt was demanding about Rs 700-900 crore, they said.

The Rs 500-crore debt that the hospital chain has run up and high operational overheads, such as high cost per bed in some of the hospitals under discussion, were worrying the buyers, they said.

Sources said South-based Apollo Hospitals, the Manipal group and a London- based private equity company had earlier evinced interest in acquiring Wockhardt hospitals, but the decision of the management to sell off only a minority stake acted as a stumbling block.

Fortis already has a presence in Mumbai through the acquisition of the Hiranandani Hospital in Navi Mumbai. A few months ago, Shivinder Mohan Singh had told Business Standard that his healthcare chain grew by developing hospitals in upcoming towns and that he would explore growth opportunities in South and Western India.

Calls made to Shivinder Mohan Singh remained unanswered. Sudarshan Majumdar, marketing director and official spokesperson for Fortis Healthcare, said he was not in a position to comment on the developments.

"We will not comment on market speculations," he said.

On Friday, Fortis Healthcare had informed stock exchanges that, so far, the company had not entered into any definite agreement on the Wockhardt deal and reports related to the same were "speculative'.

A Wockhardt spokesperson also declined to comment.

Earlier, Khorakiwala was planning to sell less than 25 per cent stake in the chain to either a clutch of private equity players or leading healthcare players, such as Apollo and Manipal Group for raising over Rs 600 crore.

Wockhardt is undertaking a debt-restructuring plan and has received shareholders' approval to sell off its animal healthcare division.

However, revenues from the animal healthcare division are less than Rs 100 crore and the company may not be able to raise much funds, said sources. The company is also looking at restructuring and hiving off some of its acquired overseas subsidiaries.