Mumbai: Manipal Hospitals Enterprises managing director and chief executive Ranjan Pai has said he would not pursue an “irrational bidding war” to acquire Fortis Healthcare and dismissed talks that his company had panicked into making a revised offer on Tuesday, ahead of an anticipated counter bid from Malaysia’s IHH Healthcare.
“We revised after hearing out some large investors. This was my entry into public markets and, honestly, I didn’t want disappointed shareholders with me,” Pai — a 45-year-old, Bengaluru-based billionaire — said. “I could have waited for rival offers rather than playing my cards early on. We wanted to address some genuine shareholder concerns and we have received positive feedback on the revised offer,” he added.
Manipal, backed by private equity firm TPG, sweetened the offer price for Fortis Healthcare to Rs 155 apiece, up from Rs 130 announced barely a fortnight back. It also tweaked the deal structure and offered to pump in money through a rights issue, allowing Fortis shareholders also to participate — as against an originally conceived preferential allotment. If it prevails, the deal would create India’s largest hospital network by revenue. TOI reported on Tuesday that IHH was finalising plans for an all-cash offer to be unveiled in the next one week, also reported by Bloomberg a day later.
“I hope to see a binding rival offer. We have been hearing about one for 18 months now,” Pai quipped when asked about counter bids for Fortis. “We have made a compelling offer and let’s see how the market reacts. We won’t be irrational in pursuing the deal. I would not comment further at the moment,” he added.
An IHH offer, if it comes, could herald a rare bidding war for a large publicly traded Indian company. Three years ago, Saroj Poddar’s Adventz Group pipped Deepak Fertilizers in a battle to gain control of Mangalore Chemicals and Fertilizers. INOX Leisures and Anil Ambani’s Reliance Capital were involved in a shareholder tussle to control movie hall operator Fame India eight years ago, while ABG Shipyard and Bharti Shipyard went head-to-head to acquire oilfield service provider Great Offshore in 2009. Manipal and TPG have been meeting up several large investors, including Eastbridge Capital, which holds about 9% stake. Several activist hedge funds have been building positions in Fortis, effectively rendered promoter-less after founders Shivinder and Malvinder Singh quit the board and lenders invoked their pledged shares. Fortis is also facing multiple regulatory probes into alleged financial irregularities, the outcome of which is still unknown.Pai said the revised offer to Fortis shareholders envisages two clean, separately managed businesses with different valuation multiples. There would be a de-merged hospitals company and a second diagnostics business, which would be eventually parked under the old Fortis Healthcare. “We hope to manage them as a standalone businesses with a common set of promoters,” he said.
Fortis shares advanced less than a per cent to Rs 148 on the BSE on Wednesday, pegging the company’s market value at Rs 7,658 crore or $1.2 billion.