Daiichi Sankyo has approached the Delhi High Court to block the sale of Fortis HealthcareBSE 1.13 % to Manipal Health Enterprises until the Japanese drug company is paid an arbitration award granted in its favour.
Daiichi claimed the proposed deal would lead to the disposal of a “key asset” involved in the payment of the award, now valued at over Rs 3,500 crore including interest and legal fees, by former Fortis promoters Malvinder and Shivinder Singh.
The court is expected to hear Daiichi’s application on Thursday.
The Singh brothers and promoter groups currently hold less than 1% in Fortis Healthcare compared with 34.43% in December 2017 because most of their holdings were pledged to banks.
“We have, and will, continue to abide by the honourable court directives. It is unfortunate that Daiichi Sankyo is constantly trying to spread misinformation about us with a malafide intent,” Malvinder and Shivinder Singh told ET in an emailed response.
Daiichi has for long been making “all possible efforts” to sabotage the Fortis deal, the Singhs said.
“Their constant blocking of any economically accretive proposals goes to show that their objective and motive is not to secure their award but rather being vindictive in nature to hurt the larger stakeholders of our group.Their repeated actions have negatively impacted Indian banks, all our shareholders and employees,” they added.
The brothers added, “…we are not going anywhere and will be addressing all matters with responsibility and sincerity.”
A spokesperson for Fortis Healthcare declined to comment, adding that the matter is sub-judice.
Daiichi has asked the court to intervene in the deal urgently and direct the respondents to deposit the entire award amount with interest and costs before “concluding any scheme of restructuring/transaction involving Fortis Healthcare.”
It asked the court to restrain the Singhs and their wives from leaving India and direct them to deposit their passports, according to the application, parts of which ET has viewed.
The deal will violate orders by the high court and Supreme Court to maintain the value of unencumbered assets disclosed during proceedings in India “as well as defeat the execution of the award,” the application alleged.
Daiichi wrote to the Securities and Exchange Board of India about a week ago, requesting that the deal not be permitted without an undertaking from Manipal Health confirming that the transaction doesn’t violate court orders in its ongoing case.
The Rs 3,900 crore Fortis-Manipal deal was approved on March 27 and involves Fortis hiving off its hospital business and merging it with Manipal Health in the first phase.
“The present application is therefore being moved to prevent the sale of shares of Fortis Healthcare to Manipal Health Enterprises or any entity,” Daiichi stated. The effect of such a transaction would be the deprivation of assets to satisfy the award amount, it said.
The respondents, despite undertakings, assurances and orders, seem to have indulged in various acts of “dissipating assets in an attempt to reduce the award to a paper decree,” Daiichi alleged.
The Delhi High Court allowed Daiichi to enforce the award in January, but an appeal by the Singhs will be heard in Singapore on April 9.
The Singhs said they are in Singapore to engage with their legal counsel to prepare and participate in the upcoming court hearings. “We will continue to fight for our justice and reputation at this point and not for economics only,” they said.
“Daiichi is probably under the fear that the Singapore arbitration award granted in their favour is without any merit and hence is now trying to protect it by stopping and denying us the right to be present in Singapore to fight for our rightful justice,” they told ET.
The high court has already ordered the attachment of all unencumbered assets, except bank accounts, disclosed to it and has appointed a chartered accountant to supervise their evaluation.
The award was granted against the Singhs for allegedly concealing information regarding wrongdoing at Ranbaxy Laboratories when they sold it to Daiichi in 2008.
Source: Economic Times