Fortis Healthcare has lost a whopping amount of about Rs 1,000 crore in the market capitalisation in a span of two days as shares of Fortis Healthcare Ltd plunged nearly 14% on the demerger of hospital business into Bengaluru-based Manipal Hospitals.
Fortis Healthcare has lost a whopping amount of about Rs 1,000 crore in the market capitalisation in a span of two days as shares of Fortis Healthcare Ltd plunged nearly 14% on the demerger of hospital business into Bengaluru-based Manipal Hospitals. Fortis Healthcare Ltd on Tuesday said the board of directors has approved demerger of its hospitals business, which will be acquired by Manipal Hospitals and TPG Capital, along with the sale of 20% stake in diagnostics chain SRL Ltd. to Manipal Hospitals, in the Rs 3,900-crore deal. “The resultant entity Manipal Hospitals will be a publicly traded company listed on NSE and BSE. The remaining FHL will be an investment holding company with 36.6% stake in SRL,” Fortis Healthcare said in a press release.
On the news of unsolicited proposal from Manipal Hospitals, shares of Fortis Healthcare dropped more than 3.5% on Tuesday. Following the confirmation of demerger of hospital business into Manipal Hospitals, shares of Fortis Healthcare dropped as much as 10% in the morning dealings on Wednesday. Due to a sharp decline in the share prices of Fortis Healthcare in the last two days, Fortis Healthcare has lost about Rs 1,008.79 crore in the market capitalisation. Fortis Healthcare Ltd held a market capitalisation of Rs 6,651.78 crore (at day’s bottom price of Rs 128.25) as against the market capitalisation of Rs 7,660.56 crore on the basis of Monday’s closing price of Rs 147.7 on BSE.
The stock of Fortis Healthcare has fallen 13.85% to a low of Rs 127.2 in the last two days from a share price level of Rs 147.65 as on Monday. A massive trading volume was observed in the shares of Fortis Healthcare on Wednesday, as at 11:48 am, more than 4.8 crore shares of Fortis Healthcare exchanged hands on both NSE and BSE with about 4.16 crore on NSE alone.
The demerger of Fortis Healthcare Ltd into Manipal Hospitals is subject to the approvals from respective shareholders of Fortis Healthcare and Manipal Hospitals, Securities and Exchange Board of India, concerned stock exchanges (NSE and BSE), Competition Commission of India and National Company Law Tribunal. “As part of the proposed transaction, Dr Ranjan Pai and TPG will invest Rs 3,900 Crs into Manipal Hospitals. The funds will be utilized by Manipal Hospitals to finance the acquisition of 50.9% stake in SRL (20.0% from FHL and 30.9% from other investors for which discussions are currently underway),” Fortis Healthcare said further.
Commenting on the transaction, Bhavdeep Singh, FHL CEO said “As an organization, we are thrilled with this transaction as it enables us to take the next bold step into our future. Much has transpired over the past 12 – 18 months at Fortis and in the healthcare industry at large; it’s now time to get back to working with our doctors and nurses to saving and enriching lives. We believe Manipal has built a terrific franchise and team and the coming together of our two organisations will be transformational for the healthcare industry.”