Nursing Fortis Back To Health

Malaysian healthcare major IHH won the race for India’s second-largest hospital chain after a fierce bidding war, but its real challenge has just begun.

- Debojyoti Ghosh and Ashish Gupta

WHEN MALAYSIA’S IHH HEALTHCARE BHD won the race to acquire India’s second-largest hospital chain, Fortis Healthcare, with an offer to invest Rs 4,000 crore in July, it seemed like it was just what the doctor ordered for the cash-strapped Fortis.

If all goes well, the two should seal the deal within three months of getting the nod from Fortis shareholders and the Competition Commission of India. The shareholders are expected to meet in New Delhi on August 13 to approve the IHH offer which came after a months-long bidding war. Fortis is gung-ho about the deal. “The IHH proposal offers a more strategically and financially compelling proposition along with simplicity and certainty,” Ravi Rajagopal, chairman, board of directors, Fortis Healthcare, said in a statement.

But the operative part is, if all goes well. Most industry watchers feel the approval is just a formality, but Japanese drug maker Daiichi Sankyo could play spoilsport. Daiichi has approached the Delhi High Court to block the Fortis sale to IHH as it tries to enforce a Rs 3,500 crore arbitration award against the erstwhile promoters of Fortis. The court asked Fortis and its former promoters—Malvinder Mohan Singh and Shivinder Mohan Singh—to respond to Daiichi’s plea by August 1. Industry experts believe Daiichi’s case is unlikely to impact the deal because the Singh brothers are no more the promoters of Fortis, which is now owned by multiple shareholders. Moreover, the chain is “not party” to the disputes with Daiichi, said an industry expert.