Unfolding of Fortis Saga – Chain of events from 2012

The board of Fortis, has approved the binding offer by IHH at Rs170/share.

Dec 14, 2018 06:12 IST India Infoline News Service

December 14, 2018

Supreme Court has asked IHH to maintain the status quo on the sale of the Fortis Healthcare. This brings more uncertainty to the stressed hospital chain. IHH was likey to go ahead with the open offer to acquire additional stake in the Fortis which now has to await the SC's approval.

September 05, 2018

Shivindeer Singh, who had earlier blamed his elder brother, has filed a case against brother Malvinder Singh and Religare’s former CMD, Sunil Godhwani in NCLT for oppression and mismanagement of RHC Holding, Religare and Fortis.

July 13, 2018

The Fortis board has selected IHH's investment proposal over Manipal/TPG. IHH offer price of Rs170/share has outbid Manipal/TPG's offer price of Rs160/share. The board will now seek shareholder's nod and the deal is subject to CCI approval. 

July 09, 2018

As per the media articles, the bid by IHH, for 51% stake in Fortis, is likely to be in the range of Rs4,700-5,400cr. At this price, Fortis is valued between Rs9,216-10,588cr. This is a significantly high premium for Fortis Healthcare’s current valuation. Manipal/TPG on the other hand have offered to inject Rs2,100cr cash in Fortis to buy RHT assets. Manipal/TPG are also speaking to some pension funds to give exit to some existing large shareholders. IHH is also planning to buy RHT seperately.

July 03, 2018

Fortis has said that it has received final binding bids from the potential suitors. The company has not disclosed who participated in this round of bidding as well as the offered price and other terms. It is learnt from the media sources that Manipal/TPG and IHH have submitted their final bids while Munjals/Burmans have decided not to participate in bidding. It is not clear if Radiant Life Care has also submitted its bid. 

June 27, 2018

Fortis Healthcare reported weak Q4FY18 results, revenue declined 3.3% yoy to Rs1,086.4cr, EBITDA was down 84% yoy to Rs12.7cr in Q4FY18, while EBITDA margins in Q4FY18 were at 1.2% vs. 7% in Q4FY17. Company reported exceptional loss of Rs833.5cr in Q4FY18 on account of goodwill impairment and write-off of the loans inter corporate deposits (ICDs).

Fortis is also planning to take a legal action against its former promoter and chairman Malvinder Singh for fund siphoning in form of ICDs.

June 26, 2018

Board of Fortis Healthcare held a meeting yesterday (June 25, 2018), to consider the annual accounts for FY18 and Q4FY18. The Board members had a detailed discussion with the management, legal advisors and the statutory auditors. The company has said that it needs further time to discuss the annual accounts and hence, the Board decided to adjourn the meeting. This meeting will now take place today i.e June 26, 2018.

June 11, 2018

Board of Fortis Healthcare has said that they will submit their Q4FY18 results on June 25, 2018. The Q4 result was due today however due to the internal investigation report by Luthra and Luthra Law Offices, results will be delayed. The deadline to submit bindng bids is revised to June 28, 2018. 
June 01, 2018

Fortis has announced that it has received expression of interest from four parties i.e. 1) Hero Enterprise Investment Office and Burman Family Office, 2) IHH Healthcare, 3) Radiant Life Care Private Limited and 4) TPG Asia VI SF Pte Ltd and Manipal Health Enterprises Private Limited. Fortis's board will grant the due diligance access to these parties for 10 days. Upon completition of the due diligance, these companies will have to submit their binding bids to the board. 

May 29, 2018
Fortis has re-invited bids from the interested parties and has also given a timeline. It has set minimum conditions for the bidders to include in the bid documents. The last date to submit a fresh bid is 5 PM on May 31, 2018. Post the submission of the bids, Fortis will provide access to due diligence. The interested parties will have to submit a binding bid before June 14, 2018 (8:30-93:0 AM). The previously accepted proposal of Munjal-Burman combine remains terminated due to the new bidding process. 

May 25, 2018
Fortis Healthcare has informed that IHH has extended the deadline to accept its offer to June 30, 2018. Earlier the company had extended the deadline to accept its offer to May 29, 2018, after Manipal/TPG revised their offer for Fortis Healthcare. IHH has proposed to invest Rs4,000cr in Fortis Healthcare at Rs175/share. Of this, Rs650 is proposed to invest immediately, while the rest Rs3,350cr would be invested following completion of the due diligence. IHH has also asked for two board seats from Fortis Healthcare. 

May 23, 2018
Shareholders of Fortis Healthcare, with a majority,  have approved the appointment of the three new independent directors on the board. After three old directors left, the last remaining old director, Brian Tempest has been removed by the shareholders with a majority. While the resolutions to appoint new directors received 99.82% vote share from shareholders, removal of Brian Tempest garnered 87.9% vote share. With this, the future of the Munjal/Burman deal has become certain, and we believe that the new bidding rounds will take place as the new board takes control of the company.

May 21, 2018

Three board members from Fortis Healthcare’s board have resigned ahead of the EGM due tomorrow. Tejinder Singh Shergill, Sabina Vaisova and Harpal Singh resigned on May 20, 2018. William Tempest is the only remaining board member who, as per the EGM agenda is to be removed.

May 14, 2018

Manipal/TPG consortium has sent a new offer to the board of Fortis Healthcare. This new offer values Fortis at Rs180/share. The new offer suggests that Fortis' board's decision to accept the proposal of Burman/Munjal will not get approval by 75% shareholders and that the proposal fails to solve the problem and deliver long-term value. The new offer values Fortis at Rs9,403cr. The new offer by Manipa/TPG has also promised to underwrite the rights issue to buyback RHT assets. The new offer is now valid until May 29, 2018. 

May 11, 2018

Late yesterday, the board has approved the binding offer of Munjal and Burman family offices. The Munjal/Burman consortium has offered to invest Rs1,800cr in the company in two tranches.  This includes upfront infusion of Rs800cr at a price of Rs167/share and a further amount of Rs1,000cr through preferential issue of warrants at Rs176/share. Munjal/Burman consortium has offered to invest Rs1,050cr immediately and rest Rs750cr in the next tranche. 

May 07, 2018

As expected, Manipal/TPG have revised their offer and now propose to invest Rs2,100cr by way of preferential allotment at Rs160/share in Fortis Healthcare. They are also proposing to buy out the shareholding of PE investors in SRL at Rs39/share. Investment in Fortis will be followed by the merger of Manipal Hospitals in Fortis Healthcare and a rights issue to buy RHT assets. 

May 06, 2018

Fortis Healthcare has said that it has received approval from its shareholders to acquire RHT assets.

May 05, 2018

The High Court has not passed orders against the company hence the stake sale process will go ahead. To facilitate further transparency, company has appointed another independent adviser, Arpwood Capital. Arpwood capital is an investment banking firm engaged in providing advisory services in M&A and capital raising.

May 04, 2018

UBS exits stake in Fortis Healthcare, which has been picked by York Capital through three different funds. 

May 01, 2018

Munjals and Burmans have revised the offer, they are now proposing to invest Rs1,800cr (earlier Rs1,500cr). Rs800cr to be invested through preferential issue of shares minimum at Rs167/share, while Rs1,000cr to through preferential issue of warrants minimum at Rs176/share. The company has also proposed to invest Rs750cr upfront. The proceeds made by the Munjals and Burmans is towards providing immediate liquidity. While raising the offer, Munjals and Burmans have also demanded three board seats. The investment proposal also plans to divest diagnostic business SRL and solely focus on hospital business. To buy back the RHT assets, the offer also plans to use the SRL divestment proceeds and a rights issue. If SRL stake sale is delayed, Munjals and Burmans plan a large-sized rights issue to fund the buyback of RHT assets. The revised offer values warrants by 8.9% and shares by 7.1% over the previous offer. 
IHH has also revised their offer and they have raised the price to Rs175/share. All the previous terms remain unchanged, this includes total investment of Rs4,000cr directly in Fortis Healthcare, of this Rs650cr is binding in nature, while Rs3,350cr is non-binding.

Manipal/TPG will now have time until May 06,  2018 to place their revised offer. The board meets on May 10, 2018, to discuss the new offers. 

April 28, 2018

Board of Fortis to wait for more binding proposals and deadline has been extended till 12 PM, May 01, 2018. Manipal and TPG will get a time until May 06, 2018 to revise their offer if a new binding offer is received by the board. The two-member committee of Deepak Kapoor and Lalit Bhasin will meet before the board meet on May 10, 2018, to evaluate the offers. Cyril Amarchand Mangaldas is the legal advisor while Chartered Bank is the financial advisor for the board. The board has also instructed the management to appoint a second independent financial advisor to advise on the bids. The board will hold an extra general meeting on May 22, 2018, as instructed by the minority shareholders.

26 April 2018

Board of Fortis has informed that due to the resignation of the evaluation panel member Ms. Ramnath, the board was not able to decide upon the binding offers for the proposed transaction. Due to this, the board has decided to adjourn the meeting and has rescheduled it for tomorrow i.e. April 27, 2018. The Board has also invited Ms. Suvalaxmi Chakraborty, Mr. Ravi Rajagopal and Mr. Indrajit Banerjee as additional independent directors of the company upon recommendation by minority shareholders, National Westminster Bank and East Bridge Capital.

25 April 2018
Ms. Renuka Ramnath, a member of the expert advisory committee, evaluating various offers received by the board of Fortis, has tendered her resignation. stating that she has excused herself from being the member of the committee due to her pre-occupation. The resignation will be tabled before the board of directors tomorrow i.e. April 26, 2018. The expert panel is chaired by Mr. Deepak Kapoor, while  Ms. Renuka Ramnath and Mr. Lalit Bhasin were appointed as a member of the committee. The race to acquire Fortis has intensified with the board now having four binding offers. 

Fortis has issued a press release stating that Manipal-TPG combine sought to impose additional onerous conditions on the Company, over and above those contained in the Implementation Agreement, that would limit the ability of Fortis to run a competitive bid process if such conditions were to be accepted.
The offer sent by Manipal/TPG is binding in nature and has several complexities. Manipal will become the second largest shareholder in SRL, while keeping the right to appoint a majority of directors on board and asking for veto in key SRL matters. It has upped the price for Fortis' hospital business to Rs121/share, valuing Fortis Healthcare at Rs161/share. 

24 April 2018

Manipal has sent a revised proposal. The offer values Fortis' hospital business at Rs6,322cr. The new offer is likely to value Fortis Healthcare at ~Rs160/share. 

Fortis receives a binding offer from Radiant. The offer values Fortis Healthcare between Rs170-175/share. This is a complex, multi-step process, which includes the buyout of Mulund hospital, demerger, spin-off, open offer and rights issue.

IHH has sent a binding offer to Fortis Healthcare. The first part of the offer is binding and includes Rs650cr investment. The rest Rs3,350cr investment is subject to satisfactory completion of due diligence. The offer values Fortis Healthcare at Rs160/share. 

IHH is likely to send a binding offer to the board of Fortis Healthcare before April 25. Just to remind, IHH already has sent a non-binding offer to invest Rs4,000cr in the company at a price Rs160/share. This will be a third binding offer if received. Yesterday, Munjals and Burmans have given more time to the board of Fortis Healthcare to decide on their offer. Meanwhile, it is also learnt that Manipal/TPG have right to match the highest bid, however, they will not exercise this right to outbid Munjals and Burmans. Manipal/TPG, however, will use their right if another highest bid emerges to acquire Fortis Healthcare. 

23 April 2018
Munjal’s and Burman’s family offices have informed that they have extended the validity period to accept their binding offer till May 04, 2018. The company had offered five days of validity period to accept the revised offer. The revised offer was dated April 19, 2018, which means that the original validity period has ended. However, on the back of new developments, Munjal’s and Burman’s family offices have now extended this period.

19 April 2018

Radiant and KKR jointly bid for Fortis Healthcare offering Rs165 per share. They offer to demerge the hospital business and plant to buy the RHT assets using rights issue proceeds.

Fortis’ board decides to set up an independent evaluation committee headed by Deepak Kapoor, Former Chairman and CEO of Price Waterhouse Cooper India, report to be submitted by April 26, 2018. Board also appoints new independent director and calls EGM to restructure the board upon request of certain minority shareholders.

The board's credibility of Fortis is being questioned by the minority shareholders and certain minority shareholders seek EGM to restructure the board.
Munjals and Burmans revise their offer with a new price of Rs161.60per share and total investment amount raised to Rs1,500cr.
17 Apr 2018

China’s Fosun sends proposal to invest up to $350mn in Fortis including preliminary investment of Rs100cr. 

16 Apr 2018

Malaysia’s IHH offers to invest Rs4,000cr in Fortis Healthcare at Rs160/share
12 Apr 2018

Fortis receives offer from Munjals and Burmans at Rs156/share to invest upto Rs1,250cr.
Manipal revises the proposal, revises the price of Fortis Healthcare to Rs155/share, has no objection to Fortis holding majority stake in SRL.
Rakesh Jhunjhunwala, East Bridge Capital questions the proposed Manipal deal with Fortis Healthcare. East Bridge Capital raises stake in Fortis Healthcare.
Daiichi Sankyo asks SEBI to block the proposed Fortis-Manipal deal.
March 2017
Fortis Healthcare expects repayment of deposits by June 2018.
Yes Bank acquires 17.31% stake in Fortis Healthcare due to invocation of ~9cr pledged shares.
Fortis Healthcare said that it is considering the buyout of the Singapore listed business trust, RHT Health Trust, which owns assets of Fortis Healthcare’s hospitals. Fortis was planning to raise funds by selling some stake IHH Healthcare Bhd. Further, KKR & Co., TPG and Bain Capital were said to interested in the deal.
Fortis holds 29.6% of RHT and also pays fees to RHT for providing services at the hospitals. The buyout is said to boost Fortis’ profit by removing this complex structure and need to pay for the services.
Shareholders thumb down Manipal Health Enterprises’ offer, in which Fortis Healthcare’s hospital business is valued at Rs97-98 per share and Fortis’ minority shareholding in SRL will attract holding company discount.
Manipal/TPG meet with several minority shareholders who are not happy with the offer.
February 2018
News reports indicate that Fortis’ auditor Deloitte Haskins & Sells LLP, didn't sign off the Q2 result report as Singh brothers took $78mn, ~Rs473cr from the company without the board's approval. This amount was loaned to certain promoter group entities in July 2017 but was not returned and these entities became part of promoter group entity and became a related party transaction.
Manipal Hospital, backed by TPG started talks with Fortis Healthcare for a possible merger, Singh brothers send their resignation to the board which sends Fortis’ shares soaring 25% intraday
SEBI and Serious Fraud Investigation Office (SFIO) start probe in Fortis Healthcare to investigate the fund transfers to firms controlled by promotors Singh brothers and delay in declaring Q2 earnings.
RK Damani’s Derive investments buys 26,58,843 shares in Fortis Healthcare at Rs144.50/share.
Promoter’s stake in Fortis Healthcare declines to 2.23% following invocation of pledged shares by Axis Bank and Yes Bank upon the order by Supreme court.
Societe Generale and BNP Paribas buys minority stake in Fortis Healthcare.
High court orders Singh brothers to attach all unpledged assets of their two holding companies.
January 2018
Delhi high court asks Singh brothers to pay Rs3562cr penalty in Ranbaxy asset sale to Daiichi Sankyo.
Fortis Healthcare denies that its promoters are in talks with private equity players to sell their stake.
Singh brothers lose an arbitration case in Delhi high court against Daiichi Sankyo, court orders brothers to pay Rs3,500 to Daiichi Sankyo, Court says that Daiichi can claim the amount from the brothers but not from their children. 
December 2017
Abu Dhabi based VPS Healthcare rumoured to enter the fray to acquire Fortis Healthcare. Manipal Health and IHH resume talks with Fortis Healthcare.
November 2017
Fortis reverses its asset light strategy and enters in an agreement with RHT to repurchase the realty assets for Rs4,650cr, the same assets it sold to RHT in 2012 for Rs2,260cr.
The Delhi High Court asks Singh brothers to file an affidavit on the status of their unencumbered assets due to violation of Supreme Court’s decision to maintain status quo on their stake in Fortis Healthcare.
October 2017
The Supreme Court refuses to allow Yes Bank and Axis Bank to sell pledged shares of Fortis Healthcare until it hears the petition of Daiichi Sankyo to block sale of shares in the company. 

September 2017
Promoters' stake reduces to 34.44% in Fortis Healthcare.
August 2017
Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala buys ~45 lakh shares in Fortis Healthcare worth Rs60cr at an average price of Rs134.65/share.
Fortis Healthcare’s shares plunge 6%, as Supreme Court bars promoters from selling pledged shares in the company.
PE firms General Atlantic and TPG Capital, jointly enter into exclusive talks to buy a controlling stake in Fortis Healthcare.
July 2017
Shares of Fortis plummet on the stock exchange after RHC holding was downgraded to default rating.
Singh brothers further reduce their stake in Fortis Healthcare through open market.
Fortis Healthcare responds to NCLT that Daiichi Sankyo is not a shareholder or a creditor of Fortis Healthcare/Fortis Malar Hospitals/SRL.
June 2017
Malaysia’s IHH Healthcare emerges the only contender to buy Fortis Healthcare. Fortis Healthcare’s shares fall 13% intraday after Malaysia’s IHH Healthcare pulls out of Fortis deal.
Fortis' promoters sell ~4% stake in the company in the open market.
Daiichi approaches NCLT to stop the demerger of SRL from Fortis Healthcare.
May 2017
PE firms TPG Capital and General Atlantic to jointly bid for Fortis Healthcare and its subsidiary SRL Diagnostics. They value Fortis Healthcare at Rs12,000cr and SRL at Rs4,500-5,000cr.
IHH Healthcare emerges as a front runner to buy Fortis Healthcare. Singh brothers holds 52.3% in Fortis, of which 85.6% stake is pledged. Singh brothers expect Rs250/share for Fortis Healthcare and Rs2,000cr for SRL.
April 2017
Private equity fund General Atlantic Llc shows interest in buying Fortis Healthcare at Rs200-210 per share. Singh brothers own 52.2% stake in Fortis Healthcare.
March 2017
The Delhi High Court imposes restrictions on Singh brothers, Malvinder and Shivinder from selling/diluting their stake in Fortis Healthcare and indicates them to take prior court approval before any stake sale.
Fortis Healthcare considers to make an offer to buy RHT Health Trust valued $726mn, IHH Healthcare, KKR, TPG and Bain Capital among strategic bidders to buy stake in Fortis Healthcare.
February 2017
TPG continues to talk with Singh brothers to buy management control and plan to merge Fortis with Manipal Health Enterprises, in which they own 22%. The combined entity to be largest hospital operator in India.
January 2017
Singh brothers in talks with Bain Capital, KKR & Co. to buy significant minority stake in Fortis Healthcare.
TPG Capital submits non-binding bid of Rs3,000cr for 26% stake in Fortis Healthcare. TPG also expects Singh Brothers to cede management control but remain investor on Fortis Healthcare.
The Delhi High Court accepts Daiichi Sankyo plea to block Fortis stake sale and let the promoters dilute their stake
December 2016
Reports indicated Singh brothers, Malvinder and Shivinder, in talks with TPG Capital to sell ~26% in Fortis.
October 2016
Fortis Healthcare completes acquisition of a 51% stake in Fortis Hospital and also acquires compulsorily convertible preference shares issued by Escort Heart Institute and Research Centre. Fortis also plans to delist its 28% stake in Singapore listed Religare Health Trust.

August 2016
Fortis Healthcare board announces demerger of SRL Diagnostics into Fortis Malar Hospitals, Fortis Malar also to be owned by Fortis Healthcare’s shareholders. Board also approves the fund raising (up to Rs5,000 cr) plan.
May 2016
Daiichi Sankyo received final award of $525mn (Rs2,563cr +4.44% interest) in the arbitration in Singapore court.
April 2014

Sun Pharma buys Ranbaxy from Daiichi Sankyo for $3.2bn.

Nov 2013
Daiichi Sankyo initiates an arbitration case in Singapore against Singh brothers alleging that they concealed crucial information during their Ranbaxy stake sale in 2008.

June 2013

As per sources, Daiichi files a case against Singh brothers, Malvinder and Shivinder in the Singapore court.

May 2013

Ranbaxy agrees to pay $500mn as penalty as it pleads guilty of fraudulent activities in the US as per the consent decree.

Daiichi says that certain ex-Ranbaxy shareholders misrepresented critical information concerning the regulatory and legal inquiry against Ranbaxy. Ranbaxy was sold by Singh brothers to Daiichi Sankyo in 2008 while it was still facing adverse regulaory actions. In December 2011, Ranbaxy signed a consent decree in the US.
October 2012
Fortis Healthcare raises Rs2,260cr by listing its hospital assets through Religare Health Trust to de-leverage its balance sheet and move in to the asset light model. Fortis Healthcare also leased back these assets.

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