Manipal-TPG raises offer for Fortis by 21% to Rs6,061 cr

Manipal Hospital Enterprises Private Ltd (Manipal Hospitals) and partner TPG Group have submitted a revised offer for Fortis Healthcare, which substantially increases its earlier offer.

The revised offer, made after Fortis’s shareholders expressed dissatisfaction with the earlier offer, values Fortis's hospital business at Rs6,061 crore (Rs116 per share), an upward revision of around 21 per cent from the previous offer that valued its hospital business at Rs5,003 crore (Rs96.5 per share).
The revised offer also raises the equity holding of existing Fortis shareholders in post-merger Manipal Hospitals to 50 per cent against the 41.4 per cent.
As previously announced, Fortis will de-merge its hospital business into Manipal Hospitals and create a combined hospital business that will be a publicly traded company listed on the National Stock Exchange (NSE) and BSE.
Majority of the stake in Manipal Hospitals, part of Manipal Education and Medical Group (MEMG), is owned by Ranjan Pai and the company has been backed by TPG Capital Asia since 2015.
"We continue to believe in the compelling prospects from the combination of the hospital business of Manipal and Fortis," said Ranjan Pai, Chairman MEMG.
"We hope that our revised offer addresses the concerns certain Fortis shareholders had raised and believe this offer is in the interests of all stakeholders, including Fortis’ shareholders," he said.
"Manipal is one of India’s most trusted and valued healthcare providers today. Our breadth of services and expertise, together with TPG’s deep knowledge and operational experience in the healthcare industry, will further support the growth and development of the combined hospital business," Pai added.
Manipal Health and TPG will not invest an additional Rs3,900 crore in the merged entity Manipal Hospitals, but make a rights issue of Rs4,000 crore, in which all shareholders will get a chance to participate.
Minority shareholders Eastbridge Capital, Rakesh Zunzunwala, Radhakishan Damani and Yes Bank were unhappy with the earlier proposal, which valued hospital business at Rs97 per share.
Manipal Education and Medical Group will separately purchase a 30.9-per cent stake in SRL from existing private equity investors by paying Rs1,113.4 crore, and will take control of the management and board of directors of the business.
The revised offer values Fortis Healthcare at Rs155  per share.  Fortis shares closed at Rs 146.40 on Tuesday, having gained 3.32 percent during the session.
Manipal Hospitals' equity valuation remained at Rs6,070 crores, even in the new offer.
The proposed merger of Fortis and Manipal creates India’s largest hospital services provider by revenue, with a pan-India presence of 41 hospitals in 19 cities across 12 states, in addition to 4 hospitals overseas.
The staff pool will comprise over 4,200 doctors, 9,300 nurses and 11,400 other employees across India.