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While Fortis Healthcare continued to hog the limelight, Delhi government draft proposals to rein-in private hospitals and Q4 results were the other major events of this past week.
Fortis re-opens bidding
It all started with Munjal-Burmans clearing the way for the Fortis board to open fresh bidding by writing a letter to the company indicating their willingness to participate in the rebidding.
The chances of the Munjal-Burman’s bid getting shareholders’ nod almost became zilch after four directors backing the duo's offer exited last week under pressure from minority shareholders.
The subsequent day, the Fortis board terminated Munjal-Burmans offer and announced initiation of fresh bidding process to sell the company.
The latest bid process provided 10 days to conduct financial and legal due diligence. As part of the due diligence, the board said it will give access to data room comprising information related finances, litigation and update on pending investigation.
The board laid conditions for the bidders including minimum investment of Rs 1,500 crore into Fortis by way of preferential allotment; plan for funding of RHT Health Trust (RHT) acquisition; plan for providing exit to private equity investors of SRL, among others.
Interestingly, the Munjal-Burmans offer that was recommended by the board earlier wouldn’t have passed muster based on the latest bid criteria announced by the Fortis board.
On Friday, Fortis board shortlisted four interested parties: Munjal-Burmans, IHH Healthcare, Manipal-TPG and Radiant Life Care to participate in the bidding process.
The bidders following due diligence will have to submit binding bid by June 14. Fortis board said it will take a call on recommending the best offer to shareholders based on consultation with financial and legal advisors.
The healthcare provider meanwhile postponed Q4 earnings to June 11 citing deliberations over outcome of internal investigation and appointed Ravi Rajagopal as non-executive chairman of the board.
Price controls – the new mantra
The Delhi government led by Aam Aadmi Party (AAP) early this week released a draft proposing several regulatory measures to restrict private hospitals and nursing homes from charging mark up prices of non-NLEM medicines and consumables beyond 50 percent from their procurement price.
The proposals of Delhi government also included capping the mark-up of implants to 35 percent and setting up of a sub-committee for capping the prices of investigations charged by private hospitals.
Analysts tracking healthcare cautioned the Delhi government to not rush with the proposals without undertaking proper legal vetting as they may end up in courts and Lieutenant Governor's office.
Q4 earnings
Glenmark, Torrent Pharma and Apollo Hospitals are some large companies that declared results this past week. Glenmark's Q4 profit was hit by US pricing pressure, Apollo Hospitals has shown recovery focusing on improving its operational metrics and reduced capex and Torrent was helped strong sales in domestic formulation business.
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