IHH could pay up to $1.47b for controlling stake in Fortis Healthcare

It was chosen as the bidder to buy the controlling stake at 31.1% to 57.1%.

IHH Healthcare Berhad (IHH) subsidiary Northern TK Venture (Northern TK) was chosen as the bidder to acquire a minimum 31.1% and maximum 57.1% controlling stake in Fortis Healthcare Limited (Fortis Healthcare) at an offer of $797.71m to $1.47b (INR40b to INR73.5b).

The preferential allotment following this will make IHH the largest shareholder in Fortis Healthcare and would trigger the requirement to make a required open offer to the public shareholders of Fortis Healthcare for 26% of the outstanding shares, under the applicable provisions of Indian takeover code.

The offer price represents a 22.3x multiple of Fortis Healthcare’s EBITDA for the last twelve months ended 31 March 2018.

Upon the acquisition, IHH will have the mandatory offer to buy 26% of Fortis Healthcare subsidiary, Fortis Malar Hospital, for INR 58 per share under the applicable provisions of Indian takeover code. Fortis Malar is a group of multi super-speciality corporate hospitals in Chennai providing medical care across multiple segments.

Fortis Healthcare is the second largest hospital chain in India. It operates 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 that catered to around 2.6 million patients in FY2018. The deal marks the significant expansion of IHH’s exposure to India, its fourth home market.

Fortis Healthcare’s hospitals have a stronger presence in North India, complementary to IHH’s existing South India-focused portfolio and provide access to a leading platform with pan-India presence, the company said.

The deal will also mean a significant equity infusion in Fortis Healthcare to address the immediate funding requirement for operations and strategic transactions.