IHH Healthcare Gets SEBI Nod to Proceed with Fortis Open Offer After Seven Years

The offer, initially announced in 2018 at INR 170 per share for Fortis Healthcare, was delayed for nearly seven years due to regulatory and legal hurdles. 

Malaysian healthcare major IHH Healthcare on Friday said it had received approval from the Securities and Exchange Board of India (SEBI) to go ahead with its mandatory open offer to acquire a 26 per cent stake each in Fortis Healthcare and Fortis Malar Hospitals.

The offer, initially announced in 2018 at INR 170 per share for Fortis Healthcare, was delayed for nearly seven years due to regulatory and legal hurdles. Based on the 2018 valuation, the deal was pegged at around INR 3,349 crore.

Since then, Fortis Healthcare shares have climbed sharply, closing at INR 980.10 apiece on the BSE on Friday, raising the likelihood that IHH may need to revise its offer price.

Through its subsidiary Northern TK Venture (NTK), IHH will acquire 235.29 million Fortis shares at a valuation of INR 23,068 crore via preferential allotment. This move triggers a mandatory open offer for an additional 197 million shares, worth INR 19,316 crore, representing 26.1 per cent of Fortis’ expanded voting share capital.

In addition, IHH must also launch an open offer for up to 4.9 million shares of Fortis Malar Hospitals at INR 64.85 per share, valued at INR 32 crore, equivalent to 26.11 per cent of Malar’s voting share capital.

The SEBI approval marks a crucial development for IHH, which first acquired a 31 per cent stake in Fortis in November 2018 through NTK. The open offer was later suspended after Japanese drugmaker Daiichi Sankyo filed a contempt plea against Fortis founders Malvinder and Shivinder Singh, stalling the deal amid a broader legal dispute over Daiichi’s acquisition of Ranbaxy Laboratories more than a decade ago.

In May this year, NTK filed a claim seeking JPY 200 billion (around INR 11,800 crore) in damages from Daiichi Sankyo in a Tokyo court, alleging that the Japanese firm caused financial losses by blocking the completion of the open offer.

“While NTK attempted to execute the open offer, Daiichi Sankyo unfairly obstructed the execution and prevented completion of the acquisition, resulting in significant losses to NTK,” IHH and NTK said in a joint statement.

Fortis Healthcare shares ended down 0.95 per cent on Friday. An email sent to the company remained unanswered at press time.

Stay tuned for more such updates on Digital Health News