Fortis Healthcare suitors' list gets longer with Fosun's $350-million offer

Adding to the list of bidders for Fortis Healthcare, Fosun Health Holdings Ltd (FHHL), a wholly-owned subsidiary of the Hong Kong Stock Exchange-listed Fosun International, on Tuesday made a proposal for primary infusion at Rs 156 a share, up to a total investment of $350 million (Rs 22.75 billion), including a preliminary investment of Rs 1 billion. The unsolicited non-binding offer, however, is subject to due diligence, to be completed within three weeks. This will enable Fosun to own a 25 per cent or more stake in Fortis.

Fosun said it understood from the public domain that Fortis was in urgent need of financial support, and that it sought to address the Indian hospital chain’s immediate cash needs with up to Rs 1 billion within the next 45 days, “including the option of subscribing to a convertible debt instrument .... in the coming days”. 

Fosun has invested $1 billion in the Indian healthcare space so far. Fosun has outlined a strategic forward-looking plan for Fortis in its offer, which includes investing in establishing new beds, reviewing operating expenses and improving the bottomline, financing the strategic acquisition of RHT (which owns Fortis’ infrastructure), apart from ability to access debt capital markets to fund growth and operations. It also intends to adopt a management incentive plan (MIP), for which the specifics would be discussed later. 

The board of directors of Fortis Healthcare will meet on Thursday to decide on investment offers received by the hospital chain so far. Fortis has received two binding offers — a revised offer from TPG-backed Manipal Health Enterprises and a joint bid by Hero Enterprise Investment Office and the Burman family office — and two non-binding offers  from Malaysia’s IHH Healthcare Berhard and Fosun Health Holdings. 

On Monday, Malaysia’s IHH said Fortis had declined to engage with it on a takeover offer, citing binding agreements with other parties. 
 

Fortis, however, informed the stock exchanges in the same evening that its board had not taken a decision yet.

Fortis has got a Rs 1.5 billion bridge loan from a non-banking financial company to run its operations smoothly till it finds a buyer. 
 

IHH’s non-binding offer valued the company at Rs 160 a share. It came in a day after TPG-Manipal sweetened its offer to Rs 155 a share. Sunil Kant Munjal of Hero Enterprise and the Burman family office, which owns around a 3 per cent stake in Fortis Healthcare, had proposed to invest Rs 12.50 billion in two tranches to take care of the urgent financial needs of the company, which is said to have only Rs 700 million in cash.