Did Fortis board go against own advisers to choose Munjal-Burman bid?

Fortis Healthcare board decides to take offer from Munjal Burman combine

Fortis shares fall 4% after board approves investment offer from Hero, Dabur family office

The Hero-Munjal consortium has emerged victor in the race for Fortis Healthcare Ltd.

The Burman Family Office and Hero Enterprise Investment Office had tabled a binding offer to invest Rs800 crore through a preferential share issue at Rs167 each and Rs1,000 crore via preferential issue of warrants at Rs176 per warrant.

Apart from bids submitted by the Munjal-Burman combine, the Fortis board had binding bids from three more competitors - Manipal-TPG, IHH Berhad, and KKR-backed Radiant Life Care - to choose from.

The group offered to invest 8 billion rupees ($119 million) in Fortis' hospitals business at a price of 167 rupees per share.

The Munjal/Burman combined offer includes equity infusion of Rs800cr at a price of Rs167/share and further amount of Rs1,000cr through preferential issue of warrants at Rs176/share. The recommendation of the Board would be placed before the shareholders for their approval.

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The board of Fortis Healthcare Ltd may have gone against the recommendations of some of its external advisers in selecting the victor of a five-way takeover battle, three people familiar with the decision-making process told VCCircle on Friday.

Shares of Fortis Healthcare fell almost 3 per cent today after the company announced that its board has picked the offer from Munjals-Burmans combine over four other suitors who made binding offers.

India's second-largest hospital chain said in a statement late Thursday that its board had chosen the offer made by a consortium of Hero Enterprise Investment Office and Burman Family Office. Fortis has set up an advisory committee to evaluate offers from suitors vying to acquire the company, or take a stake in it. IHH, Radiant/KKR and Fosun have also been sidelined by the board. "Manipal remains of the view that our offer proposed the most appropriate short and long-term plan for Fortis and was in the interests of all stakeholders, including shareholders", Manipal Group's CEO Ranjan Pai said in a statement on Friday. "The due diligence is not meant to be a price adjustment mechanism for the subsequent equity infusion", it added.

The board's decision, however, did not go down well with investors with the company's shares tanking almost 3 per cent on the bourses.

Earlier in the day, addressing media, Tempest justified the board's decision to go with the offer from Munjals-Burmans combine which had put their hat in the ring after Fortis board had approved an offer from Manipal-TPG combine on March 28. "The entire rights offer amount would be back-stopped by Radiant", the offer letter added.

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