Fortis board terminates Munjal-Burman offer, invites fresh bids

The revamped board of Fortis Healthcare today terminated the Munjal-Burman offer with mutual consent and decided to call for fresh bids for sale of the hospital group.

The Munjals-Burmans combine, whose bid for investing Rs1,800 crore was approved by the Fortis Healthcare board, has consented to re-opening the bidding process to enable the company to move ahead with the fund-raising transaction (See: Fortis Healthcare: Munjal - Burman combine agrees to reopening of bidding). 
The development comes at a time when the four directors on the Fortis Group who had approved the Munjals-Burmans bid are no longer with Fortis and the possibility of fresh bidding was in doubt.
The board has now invited interested parties to submit fresh expression of interest (EOI) by 31 May. Based on the EOIs, the board will shortlist the bidders on 1 June.
The three original bidders — Munjal-Burman Consortium, TPG-Manipal Consortium, and IHH Healthcare have also been asked to submit bids.
Bidders will then be provided 10 days for financial and legal due diligence and an opportunity to interact with the management and advisors who have conducted vendor due diligence.
Binding bids to be submitted by the bidders should have features such as:
  • Minimum investment of Rs1,500 crore into Fortis by way of preferential allotment; 
  • Plan for funding of RHT Health Trust (RHT) acquisition, having long stop date of 30 September; 
  • Plan for providing exit to private equity investors of SRL; 
  • Bids to be unconditional except for the regulatory approvals; 
  • Bids to include sources of funds to finance the transaction and plans for retention of current management and employees.
The Fortis board said it will evaluate the bids in consultation with its financial advisors and legal advisors on the basis of commercial terms such as valuation, quantum of investment and payment schedule. 
It would also look at provisioning for FHL’s near term liquidity requirements, long term strategic requirements including for providing exit to PE investors of SRL and RHT acquisition, besides bidder’s vision and value proposition for the Company.
Deal certainty, including simplicity of transaction structure, timeline, regulatory approvals required and financing arrangement will also be decisive to acceptance of a particular offer.
Fortis has appointed Standard Chartered Bank and Arpwood Capital as financial advisors to the transaction. Cyril Amarchand Mangaldas and Vaish Associates are legal advisors.