The Fortis takeover deal may be in for new twists as TPG-backed Manipal has now made a fresh offer for the assets of Fortis Healthcare Ltd (FHL), bettering its earlier bid. The details of the offer could not be known immediately. Manipal-TPG and Fortis had signed an agreement on March 27 to demerge FHL's hospital business into Manipal Hospitals. The Fortis board of directors approved the proposal by Manipal-TPG, which also involved Manipal picking up a stake in SRL Diagnostics. The agreement, however, has now been cancelled.

"Investors were unhappy with the March offer. The offer was revised subsequently. Fortis also received multiple other bids. Now Manipal-TPG has made another sweetened offer. It can go directly to the investors and if the investors find the offer compelling then they might challenge the Munjal-Burman offer selected by the Fortis board last week," said a source who did not wish to be named. Meanwhile, proxy advisory firm IiAS has urged Fortis shareholders to vote in favor of resolution to remove four existing directors on the Fortis Healthcare Ltd (FHL) as the board has not carried out a fair and transparent bid process for the hospital chain.

The existing board members are said to have favored Munjal-Burman investment in Fortis. An extra ordinary general meeting (EGM) of the shareholders is being held on May 22 to seek removal of four existing directors. With the call of proxy advisory firm to support resolution the move for overhaul of the Fortis board has gained momentum. Media reports indicate that few large institutional shareholders too are said to be backing the resolution proposed by East Bridge Capital and Jupiter Asset Management. These two funds hold over 12 percent stake in FHL.

In a note IiAS has recommended to shareholders to support the resolutions to remove Harpal Singh, Brian Tempest, Tejinder Singh and Sabina Vaisoha from the board. IiAS has said that the hospital chain will be better served by directors not linked to Fortis group entities and has also argued said that the existing board members have not allowed for fair and transparent bid process. Last week the directors had defended their actions saying the company considered binding offers given its financial situation and asked shareholders to make a informed decision on resolution.

As per media reports, Eastbridge Capital and Jupiter Asset Management favor the offer made by Malaysia's IHH Healthcare, that valued Fortis at 175 a share. Analysts have already pointed out that if these directors, who had voted in favor of the Sunil Munjal of Hero and Burmans of Dabur, are removed, then their decision is also likely to be challenged by the shareholders. The PEs have raised issues related to corporate governance in Fortis board. YES Bank which is largest shareholder in Fortis with 15 percent stake said it could not comment on client or company specific matter.

In their latest offer, the Munjal-Burmans have offered to invest 18 billion in FHL through a combination of preferential issue of equity and warrants. Their offer values Fortis at over 90 billion, or roughly translates into 172 per share. The duo has proposed an upfront infusion of 10.5 billion directly into Fortis. The remaining investment of 7.5 billion will be infused into the company over the next four months. They have also sought three board seats in Fortis. The offer is binding and there is no scope of backing out. Tan See Leng, managing director and chief executive officer of IHH Healthcare has said that they were evaluating all options and were waiting for the shareholders' decision on the matter. Leng had told Business Standard last week that they have already reached out to large portfolio investors after the board's decision, and that they have sympathized with IHH. – Business Standard

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