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Fortis Healthcare shares drop 20% as Supreme Court orders status quo on IHH deal

The verdict further delays the takeover of the embattled hospital chain Fortis Healthcare by Malaysia’s IHH, which has already been pending for over three years.

September 23, 2022 / 09:31 AM IST
The Supreme Court of India

The Supreme Court of India

The Supreme Court on September 22 continued with the stay on Malaysia’s IHH’s open offer for Fortis Healthcare, as it directed the Delhi High Court to consider the issue.

The Supreme Court has directed the high court which is considering execution proceedings of the Fortis-IHH deal to consider the issues involved in the case. The court has asked for the executing court to consider the appointment of forensic auditors to examine the transactions involved in the deal.

Malaysian major IHH Healthcare acquired a 31 percent stake in Fortis Healthcare in 2018 for $1.1 billion through a bidding process. The acquisition triggered a mandatory open offer for IHH to acquire another 26 percent stake in Fortis.

"We understand that the proceedings before the Hon’ble Supreme Court have concluded with certain directions and the suo-motu contempt has been disposed-off. We will go by the directions of the Hon’ble Supreme Court and will be seeking legal advice regarding our future course of action," Fortis Healthcare said in a statement.

A lower court will decide on whether the open offer for Fortis can be allowed based on the evidence it gets, the judges said. “Everything goes back to the executing court,” the bench said.

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In a statement, Malaysia's IHH Healthcare has said, "IHH is in the process of obtaining the written judgment from the Honourable Supreme Court of India and seeking legal advice on the impact thereof on the Transaction. Further announcements regarding the Fortis Open Offer and the Malar Open Offer will be issued after receipt of the copy of the said judgment."

IHH Healthcare's open offer for Fortis Healthcare remained stalled since 2018 with Japanese drugmaker Daiichi Sankyo challenging the deal.

Daiichi is to recover Rs 3,600 crore won in arbitration proceedings against Fortis' former promoters Malvinder and Shivinder Singh.

Shares of Fortis Healthcare plunged 20 percent to trade at an intraday low of Rs 250.35 apiece before paring some losses.
Shruti Mahajan
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