The board of directors of Fortis Healthcare today approved the de-merger of its diagnostic business. This development implies that SRL will be merged into Fortis Malar. Fortis Malar operates a hospital facility in Chennai and is listed on the Bombay Stock Exchange (BSE). The composite scheme will also provide for the sale of its hospital business by Fortis Malar to Fortis Healthcare by way of a slump sale for a lump sum cash consideration, and the same shall precede the merger, a press release by Fortis said. The diagnostic business of Fortis Healthcare, including that housed in SRL would be vested in Fortis Malar. The name of Fortis Malar will be changed to SRL Limited and this company will then be listed on the National Stock Exchange (NSE), the company said. This is in addition to its current listing on the BSE.
The appointed date for slump sale, demerger and merger under the composite scheme is opening business on January 1, 2017. This will all be subject to statutory and regulatory approvals. Fortis Malar will issue shares to Fortis Hospital shareholders in the ratio of 0.98:1 and they will also issue shares to SRL shareholders in 10.8:1 ratio. Further, Fortis Healthcare will pay an amount of Rs 43 crore as lump sum consideration to Fortis Malar for the acquisition of the hospital business of the latter.
Explaining the rationale behind the move, Fortis Healthcare says, “The hospitals and the diagnostics businesses have distinct operating models and given the macro-fundamentals of the healthcare industry, each provide a strong growth opportunity…as both businesses approach their next phase of growth, it would be strategically apt to have them restructured under separate entities to enable them to move forward independently, with greater focus and specialisation.”
Commenting on the development, Malvinder Singh, Executive Chairman of Fortis Healthcare said, “We believe this will unlock immense value for all the shareholders. As a result of the new synergistics groupings, both the hospitals and diagnostic businesses will benefit from greater clarity, a stronger focus and an independent growth trajectory.” “Equally this will enable the accelerated pursuit of their respective business goals while empowering them to reach their fullest potential,” he added.