Published: Tue, May 15, 2018
Markets | By Otis Pena

Fortis gets new offer from Manipal; EGM called for sacking directors

Fortis gets new offer from Manipal; EGM called for sacking directors

The recent selection of the winning bid did not get the nod of FHL's independent directors and, as a result, the fissure in the boardroom has widened further. The three independent members recently inducted into the board to improve transparency in the bidding process - Ravi Rajagopal, Suvalaxmi Chakraborty and Indrajit Banerjee - had reportedly voted for either IHH Healthcare Berhad or the bid submitted by the Manipal-TPG consortium. Consider this: Harpal Singh, the board chairman, is father-in-law to former promoter Malvinder Singh and Brian Tempest was the MD of Ranbaxy under the Singh brothers. The Fortis board of directors approved the proposal by Manipal-TPG, which also involved Manipal picking up a stake in SRL Diagnostics. Sources said ace dealmaker Nimesh Kampani of JM Financial is assisting Munjal-Burman to garner shareholders' support for its offer. They opined that their bid offers the highest price and most comprehensive solution, addressing the short term liquidity requirements and long term strategic objectives of the company.

Four days after FHL board chose to go with an Rs 1,800 crore offer from the Munjal-Burmans combine, Manipal said the winning bid did not address the host of issues which are plaguing the cash-strapped healthcare major.

In their latest offer, the Munjal-Burmans have offered to invest Rs 18 bn in FHL through a combination of preferential issue of equity and warrants. The disadvantage that IHH has over other bidders is the lack of time it had to conduct due diligence.

The issues include FHL's payment obligations for the acquisition of the relevant Indian entities from RHT and the exit required to be provided by FHL to the private equity investors in SRL, it added.

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Mumbai: Hectic lobbying is under way by some of the top shareholders of Fortis Healthcare to oust majority directors of the incumbent board even as the original bidder Manipal-TPG combine on Monday revised its offer price to Rs 180 per share, 8% higher than the victor group of Munjal-Burman. "Particularly given that the Fortis board's decision to accept the Munjal-Burman offer was made by a 5-3 majority vote". Without disclosing names, Tempest said the Munjal-Burman proposal had the support of the majority of the eight-member board, including the oldest serving directors.

Meanwhile, proxy advisory firm IiAS has urged Fortis shareholders to vote in favour of resolution to remove four existing directors on the Fortis Healthcare Ltd (FHL) as the board has not carried out a " fair and transparent" bid process for the hospital chain.

On May 10, the Fortis board recommended to the shareholders the revised offer of Hero Enterprise Investment Office-Burman Family Office made on May 1. This is an option which the board could look at to survive investor backlash.

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