India: Fortis, Manipal boards to meet this week to approve proposed merger

Visual from Fortis website

The boards of Manipal Health Enterprises Pvt. Ltd, and Fortis Healthcare Ltd will meet in the next couple of days to approve the proposed merger of hospital chains of Fortis and Manipal, according to two people aware of the development.

“Most probably, the board meetings of Fortis and Manipal will take place on Tuesday or the day after to discuss the merger process. A plan to acquire a majority stake in SRL Diagnostics by Manipal Health will also be discussed at the Manipal board meet,” said the second person on condition of anonymity.

According to the new structure, hospitals under Fortis will be first hived off into a separate listed entity. The new listed entity will then merge with Manipal Group. This will allow for listing of Manipal group. Fortis Healthcare Ltd will become a holding company with stakes in the merged entity and in SRL Laboratories.

Manipal and PE fund TPG will invest about Rs3,000 crore to own majority in the new combined entity, said the first person on condition of anonymity. Out of the total investment, Manipal will pump in about 60-70% while TPG will invest the rest, he added. TPG Capital, the buyout arm of TPG Group, holds 25% stake in Manipal Health Enterprises Pvt. Ltd while Singapore-based sovereign wealth fund Temasek Holdings Pte Ltd holds 18% stake.

Spokespersons for Manipal Health and TPG declined to comment. Spokespersons for Fortis and Temasek declined to comment.

Mint had reported in January last year that TPG Capital had submitted a non-binding bid for a controlling stake in Fortis Healthcare and SRL Diagnostics, but the transaction did not materialize due to differences over valuation. IHH Healthcare Bhd, Asia’s largest healthcare group, was also in the race for acquiring Fortis Healthcare Ltd.

Fortis Healthcare currently has a market capitalization of Rs7,727 crore and liabilities of Rs3,406 crore against revenue of Rs4,573 crore in FY17, according to its audited financial results.

A legal battle between Japanese drug maker Daiichi Sankyo Co. Ltd and the Singh brothers remains a hurdle for selling Fortis as a whole entity. Daiichi, which claims the Singhs had suppressed material information when they sold Ranbaxy Laboratories Ltd to the Japanese drug maker in a $4.6 billion deal in 2008, has approached the Delhi high court for intervention and is blocking the Fortis sale.

Daiichi said in court that the Singh brothers were looking to get an investor in Fortis Healthcare and that the sale would dilute assets and hamper its efforts to recover damages from them. A Singapore tribunal had ordered the brothers to pay a sum of Rs2,562 crore to Daiichi Sankyo in damages.

This article was first published on LiveMint.com.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.