IIH takeover of Fortis Healthcare stuck in court cases
15 November 2019
Amidst contempt of court proceedings against Fortis Healthcare founders Malvinder Singh and Shivinder Singh, the Supreme Court has refused to open the path for the takeover of embattled hospital chain Fortis Healthcare Ltd by Malaysian operator IHH Healthcare Bhd, say reports.
Since the contempt proceedings against the Singh brothers – Malvinder and Shivinder - naturally extends to the helthcare company they founded, the company could also be proceeded against, according to Friday’s judgment. This effectively halts IHH’s open offer to Fortis shareholders.
IHH is already Fortis’ largest shareholder with a 31 per cent stake and the stake acquisition would have brought its holdings in India’s second largest hospital company to more than 50 per cent.
Fortis shares plunged as much as 17.4 per cent, the biggest intra-day drop since February 2018, after the verdict was read out.
IIH is now effectively blocked from putting more money into a company whose founders are deep into a scandal of defrauding millions of dollars. IHH, whose efforts to turn around the loss-making Fortis through cost-cutting cannot now run its full course.
IHH’s attempt to take control of Fortis was halted last year, when Japanese drugmaker Daiichi Sankyo contested the deal as part of its efforts to recover $500 million from the Singh brothers.
Daiichi Sankyo said that it had been promised some Fortis shares by the Singh brothers in a decade-old fraud claim, before the shares were seized by creditors.
Shareholders approved Malaysian hospital operator IHH’s takeover offer of Fortis Healthcare in August 2018 after for separate bids, two scrapped deals, and the replacement of most of the company’s board.
Singh brothers are facing another Daiichi case over money it says owed in another court case.