New Delhi/Gurugram, May 11 (IANS) The decision by the Fortis Healthcare board to recommend the offer of the Hero and Burman family consortium for sale of its business to the shareholders for approval later this month was primarily guided by the certainty of liquidity flowing in to enable greater efficiency, a top Fortis official said on Friday.
However, other contenders expressed their disappointment over the same.
Following a board meeting here that lasted till late on Thursday, Fortis said its board had decided to recommend the offer of Hero Enterprise Investment Office-Burman Family Office to its shareholders.
"The Board, by a majority, decided to recommend the Hero-Burman family offer to shareholders looking at the binding bids for the point of certainty of liquidity flowing into the company," Fortis Director Brian Tempest told reporters.
"After many months of engagement with Fortis, including due diligence, we are disappointed that the board has come to this conclusion. 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 CEO Ranjan Pai said in a statement on Friday.
"Our offer comprised a significant and necessary immediate investment, a clear strategic plan to fundamentally transform Fortis, as well as synergies from a combination with Manipal. It is now for shareholders to decide whether they will accept the board's recommendation," he added.
Fortis' board had received offers from suitors such as Hero Enterprise Investment Office, Burman Family Office, Fosun Health Holdings, Malaysia's IHH Healthcare Berhad, Manipal Hospital Enterprises and Radiant Life Care for infusion of funds. The bid winners' offer was not the highest.
"Hero-Dabur have 30-40 investments in healthcare, have one hospital, which has a nurses' training college and another training hospital. To run this business efficiently, we'll need a regular supply of nurses and doctors," Tempest said.
According to Fortis, the entire exercise for selecting the Hero and Burman consortium involved a process that witnessed "deliberation and recommendation" by an independent Expert Advisory Committee (EAC).
The EAC comprised Deepak Kapoor, former Chairman of PWC (India), and Lalit Bhasin, Chairman of the Indian Society of Law Firms, along with two financial advisors -- Standard Chartered Bank and Arpwood Capital -- while Cyril Amarchand Mangaldas were the legal advisors.
The deal envisages an upfront equity infusion of Rs 800 crore at a price of Rs 167 per share through preferential allotment. The Munjal-Burman consortium has also offered a further amount of Rs 1,000 crore through preferential issue of warrants.
Tempest said five members of the eight-member board had voted in favour of the winners, while three members voted for "another party", without revealing details.
"There will be a shareholders' EGM on this on May 22 and I am positive that there will be support from the shareholders for the decision," he said.
Queried on the issue of the previous promoters Malvinder Singh and Shivinder Singh continuing on the board of Fortis' diagnostics arm SRL, Tempest said the brothers should step down.
IHH Healthcare also expressed disappointment over losing the bid for Fortis Healthcare.
"We believe we submitted the most compelling bid for the benefit of all Fortis stakeholders. Our bid, which offers the highest price and most comprehensive solution, addresses the short-term liquidity requirements and long-term strategic objectives of the company," IHH Chief Executive Tan See Leng said in a statement.
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