Fortis Healthcare to divest Fortis Malar Hospital to MGM Healthcare for Rs 128 crore

The transaction will be an all-cash deal and is estimated to be consummated by end of January 2024 (representative image)

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Fortis Healthcare Limited, an integrated healthcare delivery service provider, announced on November 24 that it has signed definitive agreements to sell Fortis Malar Hospital in Chennai, to MGM Healthcare Private Limited for a sale consideration for about Rs 128 crore.

The agreement is "for a sale consideration of approx. INR 1,28,00,25,000 (Rupees One hundred and twenty eight crores and twenty five thousand) (subject to customary closing adjustments as agreed in definitive agreements)," Fortis Healthcare said in an exchange filing.

The deal is for the sale of the business operations along with the land and building assets pertaining to Fortis Malar Hospital situated at Gandhi Nagar, Adyar in Chennai.

The transaction will be an all-cash deal and is estimated to be consummated by end of January 2024; subject to certain conditions precedent and closing conditions as stipulated in the definitive agreements including the approvals from shareholders of both Fortis Healthcare and Fortis Malar Hospitals Limited respectively, the press statement added.

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It added that the divestment is a part of Fortis’ ongoing portfolio rationalization strategy in order to focus on deepening its presence in select geographic clusters where it has a sizeable presence.

The Fortis Malar Hospital is approx. a 140-bed facility and has been facing certain legacy issues. “The proposed divestment of the Fortis Malar facility underpins our focus on optimizing the current portfolio of our hospital assets with a view to prioritize our growth and expansion in other key markets and re-allocate capital judiciously," said Dr. Ashutosh Raghuvanshi, Managing Director & CEO, Fortis Healthcare Limited in the press statement.

"This is our second under performing asset divestment in the last 2 quarters and emphasizes our resolve to improve our overall profitability and margins in the hospital segment,” he added.

The transaction comprises the divestment of the business operations pertaining to Fortis Malar Hospital residing in the listed subsidiary of the Company - Fortis Malar Hospitals Limited in which Fortis Healthcare owns a 62.7 percent equity stake, its OPD and radiology business operations related to the Fortis Malar Hospital (including the land and building on which Fortis Malar Hospital is situated) and multiple related land parcel adjacent to the property.

MGM Healthcare Private Limited is one of the fastest growing quaternary care provider in South India providing advanced healthcare services. It operates 2 quaternary care hospitals with a combined bed capacity of 600 beds and one more greenfield hospital under development in Tamil Nadu, Pondicherry region.

Earlier, Fortis Healthcare Ltd had reported a 15.7 percent year-on-year (YoY) fall in net profit at Rs 183.9 crore for the July-September quarter. Fortis had a net profit of Rs 218.2 crore in the same period a year ago. The hospital operator reported revenue at Rs 1,770 crore, reflecting a  year-on-year rise of 10 percent from Rs 1,607 crore.