Moneycontrol
Last Updated : May 21, 2018 09:34 PM IST | Source: Moneycontrol.com

Fortis Healthcare board may revisit bidding process as 3 directors resign

The executive added that Yes Bank also wants a “reasonable” time of at least 5-7 days for the due diligence to be permitted to all the bidders and whatever is the best value that can be derived from the bids with must be taken.

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The sale of Fortis Healthcare faces another test Tuesday as the board is likely to reexamine the entire bidding process. The relook seems a step prompted by the resignation of three directors who backed the Munjal-Burmans offer, sources close to the developments at the healthcare provider told Moneycontrol.

“The board is very much likely to revisit the bidding process on Tuesday and this is required. The largest shareholder has already said previously and even now that to get the maximum value to the shareholders, the board must consider all the bids and everyone should be included by giving all an equal opportunity…Even Munjal (and Burmans) can revise the price,” said sources close to the development.

A senior executive of Yes Bank confirmed they have written to the Board and want a “reasonable” time of at least 5-7 days for the due diligence to be permitted to all the bidders and whatever is the best value that can be derived from the bids with must be taken. Manipal-TPG consortium was tasked with the due diligence earlier as the bidders made offers without due diligence.

Also, the Manipal-TPG consortium earlier this month made a revised offer for Fortis Healthcare, valuing the company at Rs 8,358 crore, or Rs 160 per share, and said it will invest Rs 2,100 crore upfront in the healthcare services provider as a part of the deal.

The executive also indicated that at Tuesday’s EGM, shareholders would ratify the directorship of three directors representing minority shareholders East Bridge Capital and Jupiter India Fund on the board. And being a default shareholder, the bank has not proposed any names on the board.

Yes Bank, the leading shareholder holds 15.14 percent stake in Fortis while East Bridge Capital and Jupiter India together hold around 12 percent stake.

A spokesperson of Yes Bank said in email statement that the bank “as a matter of policy” doesn’t comment on client/company specific information.

The statement of Yes Bank official points to the fact that Munjal-Burmans isn’t a done deal and that they may have to sweeten the offer to win shareholders' nod.

“The expectation is that if the (four) directors get voted out or resign — it’s a signal that what happened in the board does not have the shareholder approval. So therefore I would expect them to look at the thing and reopen the whole process,” said Amit Tandon, Managing Director of IiAS, a Mumbai-based proxy advisory firm.

IiAS recommended supporting resolutions of East Bridge Capital on removal of the four directors.

Earlier this month, the four directors under scrutiny by investors, along with another additional director Rohit Bhasin, had voted in favour of Munjal-Burmans offer.

Three other directors Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee representing minority shareholders East Bridge Capital and Jupiter India Fund opposed the offer.

Multiple media reports indicate that Fortis' financial advisers — Arpwood Capital and Standard Chartered Bank, and legal adviser Cyril Amarchand Mangaldas — were also against the Munjal-Burmans offer.

In April this year, East Bridge Capital and Jupiter India Fund had sought the removal of these four directors Brian Tempest, Harpal Singh, Sabina Vaisoha and Tejinder Shergill for allegedly failing to work in the interest of shareholders, particularly in their handling of the hospital chain's proposed sale.

Three board members Singh, Vaisoha and Shergill have submitted resignations citing personal reasons.

Fortis board is now left with five directors — Brian Tempest, Rohit Bhasin, Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee. Tempest is likely to be removed by the shareholders.
First Published on May 21, 2018 09:34 pm
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