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China’s Fosun interested in Fortis Healthcare, offer at Rs156 per share

Another contender has emerged in takeover battle of Fortis Healthcare. China’s Fosun international group, through its subsidiary, Fosun Health Holdings Limited, has sent an unsolicited non-binding expression of interest to the board of Fortis Healthcare. Fosun is offering to pay Rs156 per share which in our opinion is not an interesting offer as the three earlier bidders have also quoted almost similar prices.

Fosun has offered to invest Rs100cr within 45 days and including an option of convertible debt instrument but subject to certain conditions Fosun is pressing. Fosun plans to invest up to $350mn (Rs2,299cr) within three weeks’, subject to the completion of due diligence. The three-week period starts once Fortis agrees to the proposal and grants Fosun access to perform the due diligence process. Fosun, by investing $350mn investment, intends to hold not more than 25% stake in Fortis.

In the nutshell, Fosun is offering $350mn subject to due diligence process with an option to meet immediate cash requirement.

Fosun is a Hong Kong-based Chinese origin multinational healthcare company. It has total assets worth $75bn. Fosun has already invested $1bn in the Indian healthcare sector.

Fortis now has four offers – Rs155/share by Manipal, Rs156 by Munjals/Burmans, Rs160 by IHH and Rs156 by Fosun.

Fortis Healthcare has already said that it is not able to accept IHH’s offer as has entered in a binding agreement with Manipal Health and if Fortis declines IHH’s offer, IHH plans to go for a hostile bid.

Fortis, yesterday has raised Rs160cr from RattanIndia Finance Private for a tenor of three years for meeting its working Capital requirements and General Corporate Purposes. This has satisfied its immediate cash requirements.

By securing the near term cash requirement, the company can now focus on running the operations while the board can start thinking of the strategic part of investments and accepting the best-suited offer.

The four-member board is also under pressure due to allegations that they are have been associated with Fortis/Religare/Ranbaxy. All eyes on 19 April 2018 when the under pressure board is scheduled to meet and decide the fate of the company.