IHH Healthcare Bhd on Monday told the Malaysian stock exchange that it will not be able to proceed with the open offer for Fortis Healthcare for the time being, following the Indian Supreme Court’s 14 December order to maintain “status quo” with regard to sale of a controlling stake in Fortis Healthcare Ltd. The order, however, does not impact IHH Healthcare’s acquisition of 31.1% stake in Fortis for ₹4,000 crore that was completed on 13 November, the Malaysian company said in the regulatory filing.
“In light of the order, Northern TK Venture (a unit of IHH) and the PACs (persons acting in concert) will not be able to proceed with the Fortis open offer for the time being until further order(s)/ clarification(s)/ direction(s) are issued by the Supreme Court of India and/ or the Securities and Exchange Board of India (Sebi),” the company said.
The apex court’s order had cast a cloud of uncertainty over the Fortis Healthcare transaction, including IHH’s planned open offer to buy an additional 26% stake from public shareholders that was scheduled to start on 18 December.
The court was hearing a plea by Japanese firm Daiichi Sankyo, which is seeking to recover ₹3,500 crore awarded to it by a Singapore tribunal in a case against the erstwhile Fortis promoters Malvinder and Shivinder Singh.
The court order, however, does not impact the subscription of Fortis shares resulting in IHH owning, through Northern TK Venture, 31.1% of the expanded voting share capital of Fortis, IHH said.
IHH Healthcare remains committed to Fortis and the development does not “diminish our resolve and absolute commitment to return Fortis to growth”, the company’s managing director and chief executive officer, Tan See Leng, said in an email message sent to doctors and other employees of Fortis Healthcare. “We will continue to execute on our plans to stabilize Fortis and ensure that it achieves its full potential as part of the IHH family,” Tan said.
Tan said that IHH Healthcare will ensure that Fortis continues to operate smoothly. “IHH remains the largest shareholder in Fortis, having a controlling stake of 31% by way of equity shares allotted through preferential allotment. IHH has already made an infusion of ₹4,000 crore in Fortis last month to meet Fortis’s immediate capital requirements and will ensure that it continues to operate smoothly”.
Both Fortis and IHH are in the process of evaluating the Supreme Court order and “seeking appropriate legal advice and will subsequently decide on the future course of action”.
After a long bidding war, a binding offer by IHH Healthcare to invest ₹4,000 crore in the cash-strapped Fortis, outbidding a consortium of Manipal Health Enterprises and TPG Capital, was unanimously accepted in July.
In its plea submitted to the court on Friday, Daiichi Sankyo argued that the Singh brothers created encumbrances on 1.2 million shares of Fortis in violation of court orders.
Meanwhile, Fortis Healthcare said on Saturday that it was not a party to the judicial proceedings and that the proceedings were solely related to the ex-promoters, who are no longer a part of the company.
In a further assurance to Fortis employees, Tan said, “You are the heart and soul of Fortis. We are confident that with your continued support and efforts we can move forward to make Fortis India’s leading healthcare provider.
On Monday, Fortis Healthcare shares declined 2.93% to ₹137.50 apiece on the BSE, while the benchmark Sensex gained 0.85% to 36,270.07 points.
Source: Mint