Fortis Malar Hospitals soars 20% on merger news

Fortis Healthcare was down 2% at Rs 184, after hitting an intra-day high of Rs 194 on the BSE in early morning trade.

Fortis Malar Hospitals was locked in 20% upper circuit at Rs 68.50 on the BSE after its parent Fortis Healthcare’s board of directors on August 19, approved demerger of its diagnostics business, which will include its majority owned subsidiaries SRL and Fortis Malar Hospitals, into a separate listed company through a composite scheme of arrangement and amalgamation.

As an integral part of the composite scheme, the demerger will be followed by SRL being merged with Fortis Malar. Preceding the merger, Fortis Malar, which operates a hospital facility in Chennai, will sell its hospital business to Fortis Healthcare for a lump sum cash consideration of Rs 43 crore.

Upon the composite scheme becoming effective, the diagnostics business of Fortis Healthcare, including that housed in SRL would be vested in Fortis Malar. The name of Fortis Malar will subsequently be changed to SRL - which is proposed to be listed on the National Stock Exchange, in addition to its current listing on the BSE.

With the composite scheme coming into effect, Fortis Malar would issue and allot 0.98 fully paid up equity shares of Rs 10 each for every 1 equity share of Rs 10 each held by them in Fortis Healthcare.

The equity shareholders of SRL, except for Fortis Malar who will acquire shares of SRL following the demerger, will be issued and allotted 10.8 equity shares of Rs 10 each of Fortis Malar for every one equity share of Rs 10 each held by them in SRL, as a consideration towards the merger of SRL into Fortis Malar.

At 02:59 pm, around 200,000 equity shares of Fortis Malar changed hands, as against an average 26,000 shares that were traded daily in past two weeks on the BSE. There were pending buy orders for 1.8 million shares, the exchange data shows.

Fortis Healthcare was down 2.2% at Rs 184, after hitting an intra-day high of Rs 194 on the BSE in early morning trade.