IHH Health, Munjal-Burmans raise bids for Fortis by 7-9% on last day

Fortis Healthcare  | In the September quarter, Rakesh Junjhunwala held a 2.65 percent holding in the stock, and FIIs have increased its stake to 41.04 percent from 40.98 percent in the June quarter. In FY21 so far the stock price has risen 0 percent to Rs 125.70 as on October 26.

Malaysia's IHH Healthcare and Sunil Munjal-Burmans sweetened their respective bids for Fortis Healthcare on Tuesday, the last day for revising bids.

IHH raised its bid by 9.4 percent to Rs 175 per share, compared to its earlier quote of Rs 160 per share. The Munjal-Burmans raised their bid by 7.2 percent to Rs 172 per share, from Rs 160 earlier.

The Malaysian firm retained rest of the proposals from its previous offer made on April 24. This included a binding proposal to invest Rs 650 crore upfront in the company through a preferential share issue without due diligence. IHH would invest the remaining Rs 3,350 crore through, but not limited to a preferential allotment, rights issue, a combination or other optimal means of solving the company's funding requirements.

"As indicated earlier, we wish to reiterate that we remain flexible to discussing with and jointly working with the Company's Board, the EAC (expert advisory committee) and existing shareholders of the Company towards identifying such other mutually-beneficial instruments," IHH said in a statement.

The Munjal-Burmans latest bid

Munjal-Burmans sweetened the bid by offering to invest Rs 1,800 crore directly into the company without seeking due diligence. Out of Rs 1800, Rs 1,050 crore would be paid upfront. The latest bid is Rs 300 crore higher as compared to the previous one.

Munjal-Burmans said the preferential allotment of warrants for Rs 1,000 crore will be done at Rs 176 a share whereas preferential allotment of equity shares for Rs 800 crore will be done at a price of Rs 167 a share.

To fund the buyout of hospital assets under the Singapore-listed firm RHT, Munjal-Burmans proposed the sale of Fortis' diagnostic arm SRL. If the SRL sale proceeds were insufficient, the duo proposed that the shortfall be funded through a rights issue. If the SRL sale itself did not materialise, then the entire purchase would be funded through a large rights issue, as plan-B.

Munjal-Burmans termed their offer as "simple, straightforward and quickest to implement to provide immediate liquidity to the company."

"We believe that there are several compelling reasons for our investment proposal to be put forward to the shareholders for their urgent consideration as it is in the best interest of all concerned," Munjal-Burmans consortium said.

Munjal and Burmans together hold around 3 percent stake in Fortis.

Fortis Board decision on May 10

IHH Healthcare is now the highest bidder for Fortis, followed by Munjal-Burmans, the KKR-backed Radiant Life Care (Rs 165 per share) and Manipal-TPG (Rs 160.60 per share).

The bidding window for Fortis closed on Tuesday at 12 pm.

Earlier, Fortis had said that the Manipal-TPG consortium would have a chance to revise its offer by May 6, based on bids received on May 1.

This was according to ‘obligations’ towards the Manipal-TPG consortium, Fortis said.

The expert advisory council, consisting of Deepak Kapoor and Lalit Bhasin, would evaluate the bids after May 6 and recommend the best offer to Fortis' board which will be meeting on May 10.