Fortis Healthcare sale: Manipal Health backed TPG Capital sweetens deal

Manipal Health Enterprises (MHE), backed by TPG Capital, has further sweetened the deal for Fortis Healthcare, valuing its hospital business at Rs 6,322 crore. The development came at a time when rivals Radiant Life Care and IHH Healthcare also revised their bids as the advisory committee set up by Fortis management weighed the various offers ahead of its meeting with the Board today.

Last week MHE had given Fortis Healthcare with a one-time waiver from the exclusivity provisions under the implementation agreement. “The aforementioned statement omits certain key facts, such as conditions of the waiver wherein Manipal and TPG sought to impose additional onerous conditions on the company ...would limit the ability of Fortis to run a competitive bid process if such conditions were to be accepted,” read Fortis Healthcare’s statement.

On Tuesday, Fortis had received two revised bids from Radiant and IHH. Sunil Munjal’s Hero Enterprise and Burman family of Dabur have offered Rs 1,500 crore.

MHE’s third proposal to the Gurugram-based hospital network is valid till Saturday. Under the latest proposal, the premium offered to the shareholders has been increased from Rs 1,058 crore to Rs 1,319 crore.

The earlier two proposals by MHE worked out an equity valuation of Rs 5,003 crore and Rs 6,061 crore, respectively.

Another clause in the revised offer is a purchase of 5% stake in SRL Diagnostics from private equity investors for Rs 1,113.4 crore, in exchange for 51% voting rights in SRL. MHE has also sought “limited veto rights in relation to certain key matters pertaining to SRL.” These “key matters” haven’t been elucidated in the offer letter.

The latest proposal has also offered “financial assistance of up to Rs 750 crore” either by way of debt financing or by way of guarantees/ comfort letters to lenders of Fortis Healthcare. This move has been made to provide immediate liquidity to the stressed company.

In order to infuse immediate investment, MHE has “already initiated discussions with potential lenders and have received an in-principle approval from ICICI Bank to provide the necessary facilities to Fortis Healthcare and its group companies,” reads the offer letter. Though ICICI Bank has agreed to a larger sum, MHE is restricting the advance to Rs 750 crore. MHE will also make an open offer to the shareholders of the new company that will be formed post the demerger for a 26% share at Rs 121 a unit.

Source: DNA Money