India: Fortis enters pact to acquire Singapore’s RHT Health portfolio for $725m

(L-R) Malvinder Singh Chairperson of Fortis Group and Managing Director of Fortis Health Care Shivinder Singh at the launch of Little Hearts Programme. Photo: Bloomberg/Getty

Fortis Healthcare Limited on Tuesday announced that it has signed definitive agreements to fully acquire assets held by Singapore’s RHT Health Trust for an enterprise value of $725 million (Rs 4,650 crore).

This is pursuant to the announcement made in November last year wherein Fortis board had approved restructuring aimed at consolidating the entire Indian asset portfolio (12 clinical establishments, 4 greenfield clinical establishment and 2 operating hospitals).

Fortis has an indirect interest of around 29.76 per cent in RHT.

The proposed transaction involves the acquisition of all the securities of RHT’s entities in India holding (directly or indirectly) clinical establishments and businesses via a purchase of securities for an enterprise value of approximately Rs 4,650 crore, which includes Rs 1,152 crore of debt that will be repaid, Fortis said in a BSE filing.

Moreover, a substantial part of the net proceeds from the consideration (after repaying debt and other transaction related expenses) received by RHT would be distributed to its unit holders, including Fortis, it added.

“Fortis believes that the proposed transaction will potentially enhance value for all its stakeholders. With the unwinding of the current structure, it would also make it easier for investor and other stakeholders to better understand the company’s business and financial performance,” the company said in a statement.

Upon completion of the securities acquisition Fortis believes that the service fees that it was paying will be completely eliminated which would significantly improve its operating profitability i.e. EBITDA and cash flows.

The proposed transaction is expected to have positive impact on its operating profit by Rs 270 crore, it said. The acquisition would be funded with a combination of equity, quasi-equity and debt.

Fortis promoters Malvinder and Shivinder Singh stepped down from the board last week after they lost a litigation with Japanese drug maker Diiachi Sankyo in an arbitration suit regarding Ranbaxy pharma, the company they once owned. The Singh brothers sold their stakes in Ranbaxy to Diiachi for $2.4 billion in 2008.

This was followed by a Bloomberg report that revealed Singh brothers took at least 5 billion rupees ($78 million) out of the publicly-traded hospital company they control without board approval about a year ago.

Fortis is a healthcare delivery service provider with verticals comprising hospitals, diagnostics and day care specialty facilities. Currently, the company operates its healthcare delivery services in India, Dubai, Mauritius and Sri Lanka with 45 healthcare facilities, about 10,000 potential beds and over 372 diagnostic centres.

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