Pharma weekly wrap: Last lap in race for Fortis, or will there be a twist in the tale?

After a string of developments that complicated the race for Fortis Healthcare, the company’s board will be meeting on May 10 to decide on the four binding offers it had received.

The deadline for Manipal-TPG to submit its revised offer ends tomorrow.

Moneycontrol reported earlier this week about Manipal-TPG alliance actively “evaluating” its bid for Fortis Healthcare after IHH Healthcare and Munjal-Burmans raised their respective offers on Tuesday, the last day for submitting binding bids.

IHH raised its bid by 9.4 percent to Rs 175 per share, compared to its earlier quote of Rs 160 per share. The Munjal-Burmans raised their bid by 7.2 percent to Rs 172 per share, from Rs 160 earlier. KKR backed Radiant Life Care has put in its bid valuing Fortis at Rs 165 per share.

related news

Manipal-TPG has so far revised its bid thrice, and its last offer valued Fortis stock at Rs 161.6 per share, which is still below the bids by IHH, Munjal-Burmans and Radiant.

With the right-to-revise option in hand, Manipal-TPG is widely expected to outbid others offering a price above Rs 175 per share to take the pole position, bringing down the curtains on the Fortis bidding.

But things may not be that simple with other bidders in the race not in any mood to throw in the towel easily.

Some media reports quoting unnamed sources said IHH Healthcare may challenge the shortlisted bid at the extraordinary general meeting (EGM) with a hostile bid – if its current bid doesn’t find favour with the Fortis board.

Hostile takeovers involve the interested party reaching out to shareholders directly typically with an offer to purchase shares at a substantial premium compared to the bid favoured by the board.

But analysts say hostile takeover isn’t going to be that easy.

Lending credence to those reports is the fact that Dr Tan See Leng, Managing Director and Chief Executive Officer of IHH Healthcare was in Mumbai for a day-long visit. The purpose of his visit was kept in wraps.

Leng, in an interview with the Economic Times, said that the IHH management team is yet to meet the Fortis management to discuss in detail the turnaround plan but has been in touch with several of its institutional investors that are also investors in its Malaysia ventures.

“I have faith in the Indian institution of corporate governance where all board members have the fiduciary duty to perform,” Leng said.

Earlier , Munjal-Burmans have called on Fortis to provide an equal opportunity to all bidders without any unfair advantage to one party.

The other possibility is that some disgruntled bidder or investor not happy with bid process laid out by the Fortis Board or the price offer may knock the court’s door.

IHH and Munjal-Burmans would wait till May 10 Fortis Board to formulate their respective strategy.

The Fortis board also has taken some steps to avert those possibilities by appointing Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee — the three nominees suggested by its investors East Bridge Capital and National Westminster Bank — as additional directors.

The board will be assisted by a two-member expert advisory committee (EAC) consisting of Deepak Kapoor and Lalit Bhasin.

Fortis appointed investment banking firm Arpwood Capital as its second financial adviser on late Friday.

Currently, Fortis Board is advised by Standard Chartered Bank with respect to the bids. Cyril Amarchand Mangaldas is acting as legal advisor for the company.

IHH Healthcare offer is better, says proxy advisory firm IiAS

Proxy advisory firm IiAS in its latest report reviewed the five offers made to buy Fortis as on May 1 and ranked IHH Healthcare offer as the best based on simplicity of the structure, valuation, exit provided to Fortis shareholders through an open offer, RHT acquisition funding certainties and experience in managing hospitals.

It must, however, be remembered that Manipal-TPG has time till May 6 to come out with a revised offer.

Leave a Reply