Manipal-TPG raises bid to buy Fortis Healthcare to pacify latter's shareholders

Manipal Hospital Enterprises Private Ltd (Manipal Hospitals) has submitted another bid to buy Fortis Healthcare after consulting with the latter's shareholders, who expressed their dissatisfaction with the earlier offer.

As a part of the revised offer, Fortis' hospital business is valued at Rs 6,061 crore (Rs 116 per share), which represents an upward revision of around 21 percent of the company's equity valuation.  The previous offer had valued Fortis' hospital business at Rs 5,003 crore (Rs 96.5 per share).

The revised offer values Fortis Healthcare at Rs 155 per share.  Fortis shares closed at Rs 146.40 on Tuesday, having gained 3.32 percent during the session.

In addition to this, existing Fortis shareholders will now hold 50 percent stake in Manipal Hospitals after Fortis Healthcare's hospital business is de-merged. In the earlier, bid Fortis shareholders were slated to receive 41.4 percent stake in the merged entity.

Manipal Hospitals' equity valuation remained at Rs 6,070 crores, even in the new offer.

Manipal Education and Medical Group (MEMG) will separately purchase a 30.9 percent stake in SRL from existing private equity investors by paying Rs 1,113.4 crore and will take control of the management and board of directors of the business.

Manipal Health and TPG will not invest an additional Rs 3,900 crore in the merged entity Manipal Hospitals. Instead, the merged company will do a rights issue of up to Rs 4,000 crore, in which all shareholders will get a chance to participate.

As previously announced, Fortis will de-merge its hospital business into Manipal Hospitals and create a combined hospital business that will be a publicly traded company listed on the National Stock Exchange (NSE) and BSE.

Majority of the stake in Manipal Hospitals, part of MEMG, is owned by Ranjan Pai and the company has been backed by TPG Capital Asia since 2015.

"We continue to believe in the compelling prospects from the combination of the hospital business of Manipal and Fortis," said Ranjan Pai, Chairman MEMG.

"We hope that our revised offer addresses the concerns certain Fortis shareholders had raised and believe this offer is in the interests of all stakeholders, including Fortis’ shareholders," he said.

"Manipal is one of India’s most trusted and valued healthcare providers today. Our breadth of services and expertise, together with TPG’s deep knowledge and operational experience in the healthcare industry, will further support the growth and development of the combined hospital business," Pai added.

The proposed merger of Fortis and Manipal creates India’s largest hospital services provider by revenue, with a pan-India presence of 41 hospitals in 19 cities across 12 states, in addition to 4 hospitals overseas.

The talented staff pool will consist of more than 4,200 doctors, 9,300 nurses and 11,400 other employees across India.