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Fortis approves offer from Munjals, Burmans

Munjals and Burmans already hold minority stake in Fortis Healthcare and they have proposed to invest Rs1,800cr in two tranches and buy RHT assets by divesting SRL Diagnostics.

Fortis Healthcare’s board has approved a binding offer from Munjal’s and Burman’s family offices late on Thursday. The Munjal/Burman consortium has offered to invest Rs1,800cr in the company in two tranches. The board has preferred Munjal/Burman consortium over TPG/Manipal, which had bid first and had a right to match clause. IHH, Radiant/KKR and Fosun have also been sidelined by the board. It will be interesting to see how these bidders respond to the board’s decision, as their offers were also equally competitive.

It should also be noted that Munjal and Burman also hold minority stake already in Fortis Healthcare.

The Munjal/Burman combined offer includes equity infusion of Rs800cr at a price of Rs167/share and further amount of Rs1,000cr through preferential issue of warrants at Rs176/share. The consortium has offered to Rs1,050cr to invest upfront, while rest Rs750cr in the next tranche. Warrants will be convertible within a period of 18 months from the date of allotment. They have also demanded three board seats and proposed to divest diagnostics chain SRL Laboratories, use the proceeds to buy assets of RHT Holdings.

The board received inputs from the independent Expert Advisory Committee, financial advisors (Standard Chartered Bank and Arpwood Capital) and legal advisors i.e. Cyril Amarchand Mangaldas. The board recommendation would now go for shareholder’s approval and would also require necessary regulatory approvals.