Fortis Healthcares board picked the acquisition offer made jointly by Sunil Kant Munjal of Hero Enterprise and the Burman family, giving it victory in a hotly contested race that saw the combine beating out bids by TPG-backed Manipal Hospitals, IHH Healthcare and Radiant Life Care-KKR.
The board, post having the detailed discussions on the pros and cons of each offer, decided by majority, to recommend the offer of Hero Enterprise Investment Office-Burman Family Office to the shareholders for approval, Fortis stated in a filing.
The decision was made late on Thursday evening following a marathon meeting during which the board considered the recommendations of an advisory committee it had set up last month to evaluate binding proposals, the company said in a statement.
Hero Enterprise and the Burman family of the Dabur group have offered to invest Rs 1,800 crore directly into Fortis Healthcare through the preferential allotment of equity andwarrants.
Provided all warrants are converted into shares, the infusion will see the joint bidders picking up a 16.80% stake in Fortis Healthcare.
However, the board was divided on the decision, sources said.
While the original members of the board supported the Munjal-Burman offer, the newly appointed ones were against it.
This could not be independently verified.Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee, were recently inducted onto the Fortis board after they were nominated by East Bridge Capital and Jupiter Asset Management, a group of minority shareholders that had sought the removal of existing directors Brian Tempest, Tejinder Shergill, Sabina Vaisoha and Harpal Singh.
Fortis shareholders have to ratify the decision.We are delighted that the board has accepted our offer, which is, unarguably, the best solution, Munjal said.
We are sure that the shareholders will see the intrinsic value in our proposal and repose confidence in us.Munjal heads Dayanand Medical College in Ludhiana, while the Burman family have successfully built large-scale healthcare enterprises including Dabur Pharma, HealthCare at HOME and Oncquest.Fortis is a national healthcare asset which has a good spread across the country and we hope to help the company become what it ought to be, added Anand Burman.
The immediate plan of action for the company should be to build on its strengths, retain talent, expand business, and institutionalise processes at Fortis.JM Financial was financial advisor to the Munjal-Burman combine.
Standard Chartered Bank and Arpwood Capital were financial advisors and Cyril Amarchand Mangaldas was legal advisor to Fortis.IHH, KKR and Manipal-TPG have been circling Fortis over the last 18 months but hadnt made concrete offers for the asset until earlier this year.
Over the past month, the Munjal-Burman combine competed with binding offers by Manipal-TPG, IHH Healthcare and Radiant Life Care-KKR.On April 19, the Fortis board had set up an expert advisory committee to deliberate on all binding offers for Fortis that do not require due diligence.
The board met on Thursday to take a call on these offers.In April, the Burman family also purchased warrants in Religare Enterprises that on conversion would give them a 9.9% stake in Religare.
The warrants were issued to three of their companies on a preferential basis.
Anand Burman and Mohit Burman said that they had invested in Religare due to private equity firm Bay Capitals involvement in the company.