Fortis Healthcare board approves scheme for diagnostics business demerger

Appointed date for the slump sale, demerger and merger under the composite scheme is January 1, 2017, said the company press release.

Presently, the healthcare delivery services business, ie hospitals, and the diagnostics businesses are housed in Fortis Healthcare & Fortis Malar (which primarily comprise of the operating and managing of the hospitals, providing diagnosis and treatment related to multiple chronic & non-chronic specialities and diagnostics business) and SRL (which is engaged in diagnostics business).

The hospitals and the diagnostics businesses have distinct operating models and given the macro-fundamentals of the healthcare industry, each of these provide a strong growth opportunities in the foreseeable future. Both businesses have a pan-India presence and have since their inception attained a significant size and scale in their respective segments.

"As both businesses approach their next phase of growth, it would be strategically apt to have them restructured under separate entities to enable them to move forward independently, with greater focus and specialisation, leveraging further on their respective capabilities and their strong brand presence. Additionally, the proposed restructuring, would lead to a simplified organisation structure assisting shareholders and investors to better understand and evaluate both the businesses independently as investment options and potentially lead to a higher value illumination of each of these businesses,” said Fortis Healthcare in a press statement while explaining the rationale behind the demerger of diagnostics business.

Post restructuring, promoters will own 63.1 percent and 40.6 percent in the Fortis Healthcare and demerged entity Fortis Malar (to be renamed SRL), respectively.