Fortis Shareholders Approve IHH’s Rs 4,000-Crore Offer

Shareholders of Fortis Healthcare Ltd. approved Malaysia's IHH Healthcare BHD's binding offer to take control of India's second-largest hospital chain, capping months-long takeover battle after founders lost control.

Fortis shareholders approved fund infusion of Rs 4,000 crore from IHH Healthcare, the company said in a statement accompanying its earnings filing. Northern TK Venture Pte Ltd., a wholly owned indirect subsidiary of IHH, was classified as promoter.

Fortis Healthcare will issue 23.5 crore preferential shares to IHH Healthcare at Rs 170 apiece for a 31.1 percent stake, according the offer approved by the board. That values the hospital company at Rs 8,880 crore. IHH have to make an open offer to acquire another 26 percent from public shareholders under the market regulator's takeover norms.

“We have received an overwhelming 99.7 percent votes in favour of the preferential allotment to IHH from the shareholders who voted,” Ravi Rajagopal, chairman, Fortis Healthcare, said in the statement. “With this shareholder approval of preferential allotment of shares, the transaction is now awaiting other regulatory approvals.”

The revamped board of the hospital company had selected IHH, Asia's largest healthcare company, over an offer from private equity firm TPG-backed Manipal Health Pvt Ltd. The bidding war had started earlier this year after founders Malvinder Singh and Shivinder Singh lost pledged shareholding amid allegations on siphoning funds to repay personal debt.

IHH will hold a stake of 31.2 percent to 57.21 percent, depending on the success of the open offer. The IHH bid also provides for refinancing debt to the extent of Rs 2,500 crore. IHH will separately make a mandatory open offer to Fortis Malhar shareholders of up to Rs 29 crore at a price of Rs 58 apiece.