Fortis Healthcare shares slumped over 3 per cent on Friday after its Board of Directors approved demerger of its diagnostic business into another group company, Fortis Malar Hospitals through a composite scheme of arrangement. Fortis Malar operates a hospital facility in Chennai. Fortis Healthcare scrip ended 3.27 per cent down at Rs 187.80, whereas Fortis Malar ended 2.98 per cent up at Rs 57.10.
Fortis Healthcare informed BSE that company’s board has approved a proposal to demerge its diagnostics business, including that housed in its subsidiary SRL Ltd into another majority-owned subsidiary, Fortis Malar Hospitals pursuant to a composite scheme of arrangement and amalgamation.
After the demerger of Fortis Healthcare’s diagnostic business, name of Fortis Malar will be changed to SRL Limited and this company will then be listed on the National Stock Exchange (NSE). This is in addition to its current listing on the BSE.
As part of the meger deal, Fortis Malar will pay lump sum cash of Rs 43 crore for selling its hospital business to Fortis Healthcare. As part of the demereger, 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.
“Upon the composite scheme becoming effective, and subject to receipt of requisite regulatory and statutory approvals, the diagnostics business of Fortis Healthcare, including that housed in SRL would be vested in Fortis Malar,” the press release said.
“We believe this will unlock immense value for all the shareholders. As a result of the new synergistic groupings, both the hospital and diagnostic businesses will benefit from greater clarity, a stronger focus and an independent growth trajectory,” Fortis Healthcare Executive Chairman Malvinder Singh said.
Appointed date for the slump sale, demerger and merger under the composite scheme is January 1, 2017.