L&L has advised the leading integrated healthcare delivery service provider, Fortis Healthcare Limited in connection with its bid process, whereby the Malaysian-Singaporean private healthcare group IHH Healthcare Berhad (“IHH”) has been chosen as the preferred bidder to take over and acquire control of Fortis and its subsidiary companies. A consortium comprising of TPG and Manipal was the other bidder.
Pursuant to this, IHH shall infuse INR 4000 crores through subscription to a preferential allotment, followed by a mandatory open offer to the public shareholders of Fortis for acquisition of up to 26% of the share capital of the Company, and an indirect open offer for public shareholders for 26% of its subsidiary, Fortis Malar Hospital Limited. On completion of the transaction, the total deal size, assuming full participation in the open offer, would be approximately INR 7400 crores.
Fortis is a leading integrated healthcare delivery service provider in India, with healthcare verticals encompassing hospitals, diagnostic services, day care facilities, as well as, other specialty services. Fortis presently operates healthcare delivery services in India, Dubai, Mauritius and Sri Lanka with a network of 45 healthcare facilities, 4800 operational beds (rising potentially to 10,000 beds), 314 diagnostic centres and approximately 5,245 collection points. The operations of Fortis and its subsidiaries have recently been under considerable financial stress. This transaction forms part of Fortis’ goal to stabilize its operations and concludes its long-running search process to find a satisfactory partner.
The Firm was initially approached by the Audit Committee of Fortis to carry out an investigation into and formulate a report (“Investigation Report”) on, the governance and control mechanisms of the Company, including specifically, with respect to certain inter-corporate deposits and investments and acquisitions made by the Company and its subsidiaries. Thereafter, the Firm’s Corporate and M&A team was approached by the re-constituted board of directors of the Company comprising of independent directors, to advise and assist the Company.
In the backdrop of the Investigation Report, the Firm engaged with the auditors to address their concerns and ensure the expeditious release of the audited financial statements of the Company, which was a crucial step in the fructification of the bidding process – inasmuch as it, along with the Firm’s Investigation Report, provided potential investors clarity on the performance of the company. The Firm was also involved in assisting and advising the Company in initiating the remedial measures post the release of the Firm’s Investigation Report.
The Firm was also requested by the Company to be involved in the bid process with the evaluation of potential bids, negotiation, finalization and execution of the definitive transaction documents. The nature of restructuring and bidding process is being likened by any analysis to be similar to that involving Satyam Computers Ltd.
The transaction remains subject to approvals from shareholders and regulatory authorities, and the Firm continues to remain involved in the process of seeking required regulatory approvals, the open offer process, and other aspects involved in the closing of the transaction, as well as, assistance on other strategic aspects and dispute scenarios.
The Transaction and Advisory team was led by Partners – Mr. Sundeep Dudeja & Mr. Vaibhav Kakkar and Associates Mr. Sahil Arora & Mr. Debarpan Ghosh, working under the overall guidance of the Firm’s Managing Partner, Mr. Rajiv K. Luthra who provided crucial direction with respect to key strategic issues.
