Deal done, Fortis board asks Singh brothers to exit SRL Diagnostics board
The takeover saga at Fortis Healthcare, one of India’s leading healthcare chains, culminated on Thursday, with the board choosing the Hero Enterprises-Burman Family Office offer to be the best for the hospital and diagnostic chain.
Brian Tempest, an independent director at Fortis Healthcare, said that liquidity and certainty were the reasons for choosing the Hero Enterprises-Burman Family bid. Five members of the board had voted in favour of the winning bid, whereas three voted for other parties.
Sunil Munjal, chairman of Hero Enterprises, along with Dabur's Anand and Mohit Burman, had sweetened their offer for Fortis on May 1.
The recommendations of the board will now be placed before the shareholders for their approval.
Meanwhile, IHH Healthcare is disappointed with the board's decision. "We are disappointed by the decision made by the Board of Fortis, as we believe we submitted the most compelling bid for the benefit of all Fortis stakeholders. Our bid, which offers the highest price and most comprehensive solution, addresses the short-term liquidity requirements and long-term strategic objectives of the company", said Dr Tan See Lang, Managing Director and Chief Executive Officer of IHH Healthcare.
"We remain committed and are currently evaluating our options. We are open to further discussions with all stakeholders, and look forward to the support of Fortis shareholders," he added.
In the latest round, the Munjal-Burmans have offered to invest Rs 18 billion in Fortis Healthcare through a combination of preferential equity and warrants.
Their offer values Fortis at over Rs 90 billion, or around Rs 172 per share. The duo has proposed an upfront infusion of Rs 10.5 billion directly into Fortis. The remaining Rs 7.5 billion will be infused into the company over the next four months. They have also sought three seats on the Fortis board. Besides, they have also proposed a strategic sale of SRL Diagnostics after divesting Fortis Healthcare’s stake in it.