IHH Healthcare Berhad (IHH), through its wholly owned subsidiary Northern TK Venture Pte. Ltd. (Northern TK), was announced as the preferred bidder to acquire a controlling stake in Fortis Healthcare Limited (“Fortis Healthcare”), a leading healthcare service provider in India.
This was through a combination of primary equity infusion and secondary purchase from public shareholders of Fortis Healthcare at an offer price of INR 170 per share (“Fortis Acquisition”). Upon completion of the Fortis Acquisition, IHH will hold a minimum of 31.1% and a maximum of 57.1% equity interest in Fortis Healthcare and will trigger a mandatory tender offer to acquire 26% equity interest in Fortis Healthcare’s listed subsidiary, Fortis Malar Hospital Limited (“Fortis Malar”), under the applicable provisions of Indian takeover code.
EBITDA for the last twelve months ended 31 March 2018 and 19.5% and 15.3% Premium to the closing share price on 12 July 2018 and sixty-day volume weighted average price (“VWAP”), respectively.
The Malar Open Offer is at INR 58 per share, representing an implied equity valuation for 100% of Fortis Malar of INR 1,092 million (RM 64 million). The Malar Open Offer price represents a 13.0% and 0.8%
Premium to the closing share price on 12 July 2018 and sixty-day VWAP, respectively.
Depending on the acceptance levels for the Fortis Open Offer and Malar Open Offer, the total funding required for the transaction will be between INR 40 billion (RM 2,348 million) and INR 74 billion (RM4,331 million), which will be funded through existing cash reserves and debt facilities.
Key highlights for IHH
- Significant expansion of IHH’s exposure to India, its fourth home market and one of the most attractive countries globally for healthcare, through a controlling interest in the second largest hospital chain in the country
- Fortis Healthcare’s hospitals have a stronger presence in North India, complementary to IHH’s existing South India-focused portfolio and provides access to a leading platform with pan-India presence
- Offers IHH and Fortis Healthcare significant synergy potential in management, administration and operations, leveraging IHH’s global private healthcare execution track record and expertise
Key highlights for Fortis Healthcare and Fortis Malar
- Significant equity infusion in Fortis Healthcare to address the immediate funding requirement for operations and strategic transactions
- Attractive option for the public shareholders to monetise their shareholdings at a premium
- Cash offer provides certainty in the context of high historical price volatility
- Simple and binding offer structure with limited conditions and a short timeline to completion
- Secures a clear path forward for Fortis Healthcare, with the backing of a leading global healthcare group as the majority shareholder to provide a stable financial and operational platform to continue to grow
Fortis Healthcare is a leading integrated healthcare services provider in India with operations spanning across both hospitals and diagnostics businesses. Currently, it is the second largest player in India by number of hospitals, operating a network of 34 hospitals across the country and internationally with a capacity of over 4,600 beds and employs more than 2,600 doctors and 13,200 support staff who catered to 2.6mn patients in FY2018.
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