IHH Healthcare puts open offer for Fortis Healthcare on hold

Malaysia’s IHH Healthcare Berhad has put its open offer to purchase additional 26% stake in Fortis Healthcare on hold.

This move by IHH Healthcare follows the Supreme Court’s Friday ruling to maintain status quo with regards to the sale of the controlling stake in Gurugram-based Fortis Healthcare.

In a public announcement by managers of the deal, it is stated that “the acquirer (IHH Healthcare) and PACs will not be able to proceed with the Open Offer as per the timeline set out...Once further orders(s) / clarification(s) / direction(s) are issued by the Honourable Supreme Court of India and, the acquirer and  PACs will decide on the next steps.”

After the apex court’s order, IHH Healthcare in a regulatory filing said, “The Board also wishes to clarify that IHH, PPL (Parkway Pantai Ltd) and NTK (Northern TK Venture Pte Ltd) were not a party to the proceedings before the Supreme Court of India, and that the order does not impact the subscription which was completed on November 13, 2018 in accordance with applicable law, resulting in IHH through NTK, owning 31.1% of the expanded voting share capital of Fortis Healthcare.” 

IHH through Northern TK Venture was to acquire over 197 million shares through the open offer at Rs 170 per unit. The Malaysian company was to spend up to Rs 3,300 crore to increase the holding from the present 31.10% to 57.10%.

The open offer was scheduled to start today (December 18) and conclude on January 1.  On Saturday, Fortis Healthcare spokesperson in a statement had clarified that the company “is not a party to the judicial proceedings in which the order has been passed. As we have reiterated many times earlier, the ex-promoters are no longer a part of Fortis and the judicial proceedings yesterday were in matters solely related to them – specifically, in connection with the alleged transfer of their shares to Indiabulls Housing Finance Limited, in respect of which contempt proceedings had been sought to be initiated and the transfer itself being sought to be set aside.”

“We would also like to emphasise that this order does not impact the preferential allotment that was made to Northern TK Ventures (a wholly owned subsidiary of IHH Healthcare Berhad) by Fortis on November 13, 2018, in accordance with applicable law, and for which requisite disclosures were made to all relevant regulatory authorities - consequent to which IHH Healthcare Berhad owns 31.1% equity stake in Fortis,” the statement said.

Last month, IHH had infused Rs 4,000 crore in Fortis Healthcare to meet its capital requirements and ensure smooth operations. IHH Healthcare is now the single largest shareholder in the troubled hospital chain that operates about 30 private hospitals in India.

Supreme Court’s latest ordered is a result of Japan’s Daiichi Sankyo filing a contempt plea against Fortis Healthcare founders Malvinder Singh and Shivinder Singh, wherein Daiichi argued that Singh brothers had created encumbrances on 12 lakh Fortis Healthcare shares in violation of the court orders. 

On Monday, Fortis Healthcare on BSE shares fell 2.93% to Rs 137.50 at the close. On Friday, the share price had dropped 6.8% to Rs 141.65 per unit.

COMING TO A HALT

• 26% – IHH to buy from Fortis Health shareholders
   
• 31.1% – Stake IHH holds in Fortis Healthcare through NTK