Manipal-TPG raise Fortis bid: 3 key things about the deal important to Rakesh Jhunjhunwala and Porinju

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Published: April 11, 2018 12:53:26 PM

In a bid to win over minority shareholders, TPG Capital backed Manipal Hospitals Enterprises has raised its offer to buy Fortis Healthcare’s hospital business, a company in which ace investors Rakesh Jhunjhunwala as well as Porinju have an equity stake.

Rakesh Jhunjhunwala had raised questions over the sanctity of the Forits Healthcare-Manipal deal.Rakesh Jhunjhunwala had raised questions over the sanctity of the Manipal-Fortis Healthcare deal. (Image: Reuters)

In a bid to win over minority shareholders, TPG Capital backed Manipal Hospitals Enterprises has raised its offer to buy Fortis Healthcare’s hospital business, a company in which ace investors Rakesh Jhunjhunwala as well as Porinju have an equity stake. Earlier, Rakesh Jhunjhunwala had raised questions over the sanctity of the deal. “What is the sanctity of a deal approved by a board of directors appointed by a group of shareholders who are no longer shareholders of the company?” Rakesh Jhunjhunwala told in an interview to The Economic Times.  Rakesh Jhunjhunwala had raised that Fortis healthcare’s hospital chain must be sold through a fair process which allows all interested parties to bid, and not by a board who have been elected under Shivinder Singh and family, who are no longer shareholders in Fortis. We take a closer look at the revised bid, and whether it will win the favour of minority investors.

Bid increased by more than 20%

The latest offer values Fortis’ hospital business at about 21 percent higher to Rs 60.61 billion or 116 rupees per share, according to a statement released by Manipal Hospitals released yesterday. Earlier, after taking the swap ratio into account the combined value of the business was coming to Rs 140 per share. According to the revised terms, the Fortis’ hospital business is valued at around Rs 155 per share.

Improved swap ratio for shareholders

According to the previous terms of the deal, for every 100 shares of Fortis, a stockholder would receive 10.83 shares in the combined entity, Manipal Health Enterprises. According to the revised terms, a stockholder will now get 13.1 shares in the combined entity, sweetening the deal for minority shareholders.

Erstwhile promoter shareholding still unclear

According to the old plan, the shareholding of promoters Malvinder and Shivinder Singh in the combined entity was slated to come down to 0.3% from the existing 0.8% in Fortis. Further, Manipal Chief Executive Ranjan Pai’s shareholding would have come down to 37.9% in the combined entity from 58.8% before the merger. Manipal’s statement did not mention what this would be under the revised terms. “We hope that our revised offer addresses the concerns certain Fortis shareholders had raised and believe this offer is in the interests of all stakeholders, including Fortis’ shareholders,” Ranjan Pai said in the statement.

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