The diversified Hinduja Group is learnt to have opened talks with Wockhardt Ltd to acquire a majority stake in its healthcare arm, Wockhardt Hospitals Ltd.
Deeply in financial distress, Wockhardt, which had a turnover of Rs 2,653 crore in 2007-08, has been trying to sell its unlisted subsidiary for months now. On Tuesday, it had announced plans to restructure its debt by making a reference to the Corporate Debt Restructuring Cell. According to rating agency Crisil, Wockhardt?s debt stood at Rs 3,777 crore on December 31, 2008. The company has to redeem foreign currency convertible bonds worth about Rs 500 crore by September. Its market cap on Thursday was at Rs 834 crore.
The Rs 12,000-crore Hinduja group, which runs a hospital in Mumbai in the name of its founder, PD Hinduja, has been planning to expand its healthcare portfolio by setting up a chain of hospitals under the Hinduja brand name.
Last year, SP Hinduja, group chairman, had announced plans to put up a Rs 300-crore, 250-bed hospital in Chennai. Acquiring Wockhardt Hospitals, which has 15 hospitals across India, will help the Hindujas meet their objective quickly, sources said.
When contacted, Hinduja Hospitals CEO Pramod Lele said, ?We do not comment on market rumours.? Huzaifa Khorakiwala, executive director, Wockhardt Limited, also refused to comment.
According to merchant banking sources, Wockhardt is keen to close the deal within a month. Despite its talks with various players, including Fortis, the company could not close any deal because of differences over valuation. This week outgoing chairman Habil Khorakiwala told employees in an email that the reports of the Forti bid was ?untrue.? Fortis had also denied reports of a likely deal with Wockhardt.
Though the talks between the Hindujas and Wockhardt Hospitals are reported to be progressing, there is still a possibility of Fortis coming back into the negotiations.
Hinduja Group owns businesses in automotive, information technology, media, entertainment & communications, banking & finance, infrastructure, project development, chemicals & agri business, energy, real estate and healthcare.
Wockhardt Hospitals had plans to set up 16 more hospitals and expand the number of beds to 3,300, from 1,475, by March 2009. Towards this, it planned an investment of Rs 900 crore, mainly relying on a Rs 700-crore initial public offer last year. But the public offer had to be withdrawn because of poor investor response. The subsidiary too has a large overhang of debt.
Another reason for the delay in closing a deal is the confusion over the size of the debt, sources said. Wockhardt also had been in talks with private equity players such as General Atlantic and Advent to dilute its stake in the hospital arm, but the talks did not fructify.
A neat fit
•Hindujas want to set up a chain of hospitals
• Wockhardt, with 15 hospitals, fits the bill
• Wockhardt is keen to close the deal in a month