Malaysia's IHH offers more than Manipal for Fortis Healthcare

India's Fortis Healthcare Ltd said on Friday Malaysia's IHH Healthcare Berhad has offered to buy the company at Rs 160 per share, making it a better bid than Manipal Hospitals. Manipal Hospitals Enterprises Pvt Ltd offered to buy Fortis, which is among India's largest hospital operators, at Rs 155 per share earlier this week.

The offer came under criticism from Fortis's minority shareholders, including investor Rakesh Jhunjhunwala, who called the price "low". IHH, one of Asia's largest healthcare operators, made an "unsolicited non-binding expression of interest" to Fortis for a "possible due diligence and participation with the company", Fortis said in a statement on Friday. The IHH letter, which Fortis made public, states that it was making the offer due to the "inability of the statutory auditors of Fortis to opine on its financial position as at December 31, 2017, and regulatory investigations that are currently underway."

Fortis has also received an investment offer worth Rs 1,250 crore at Rs 156 per share from India's Hero Enterprise Investment Office and the Burman Family Office - private investment arm of the family that owns consumer goods firm Dabur India, the company had said on Thursday. Fortis is under investigations by India's Serious Fraud Investigations Office and the Securities and Exchange Board of India regarding financial fraud. The company's Chief Executive Bhavdeep Singh said last month he expects the probes to be over within the next 12 months. Malaysia's IHH Healthcare is higher than Manipal Health Enterprises' offer of Rs 155 per unit by valuing the company at Rs 6,061 crore.

Manipal Health Enterprises had raised its offer for Fortis Healthcare Ltd to Rs 155 per share by valuing the hospital business higher at Rs 6,061 crore, from an initial total equity valuation of Rs 5,003 crore. In a filing with the stock exchanges on Friday, Fortis Healthcare Ltd (FHL) said it has received an unsolicited nonbinding expression of interest from IHH Healthcare Berhad for possible due diligence and participation with the company.

The company also shared a letter sent by IHH Healthcare Berhard Managing Director and Group CEO Tan See Leng expressing his company's strong interest in Fortis Healthcare Ltd and its affiliates in a suitable manner. Leng claimed : "The recent agreement of Fortis with Manipal Healthcare and TPG Capital for a transaction involved various complex steps over a prolonged period." We believe that we could provide an alternative transaction construct, which in our view, would offer a better option to the company's shareholders at an attractive valuation, Leng added. He also said that Fortis Healthcare faces several issues which pose significant challenges and need to be swiftly addressed.

At this critical juncture, the company needs a visionary strategic partner with significant operational expertise and sufficient balance sheet strength to navigate troubled water and steer the company in the fight direction. As part of the proposal, Leng said, IHH will work with the board and the management of the company to identify optimal financing solutions to enable the company to fulfil its commitments during this challenging phase and stay afloat.

Stressing that its offer is nonbinding, IHH asked the Fortis board to respond on its offer by 1700 hours, April 18. Leng also hinted at the possibility of IHH making revised counter offer if the other suitors were to revise their bids. In March, Fortis Healthcare Ltd. (FHL) board had approved demerger of its hospitals business, which was to be acquired by Manipal Hospitals and TPG Capital, along with the sale of 20 per cent stake in diagnostics chain SRL Ltd, in a Rs 3,900-crore deal.