April 19, 2018 / 12:57 PM / a month ago

India's Fortis Healthcare to form committee to assess binding bids

(Reuters) - Indian hospital operator Fortis Healthcare (FOHE.NS) will set up an advisory committee to evaluate binding offers from suitors lining up to buy the cash-strapped company or take a stake.

Fortis has become the target of a takeover battle that includes offers from China’s Fosun International (0656.HK) and Malaysia’s IHH Healthcare (IHHH.KL). Both offers, however, are non-binding as yet.

The other two offers — from local rival Manipal Health Enterprises and a consortium of two prominent Indian business families, Hero Enterprise and the Burman Family Office — are both binding.

Manipal sweetened an earlier offer and now wants to buy Fortis for 155 rupees per share, valuing the company at 80.39 billion rupees ($1.2 billion).

Hero and Burman, which together hold a 3 percent stake in Fortis, upped their previous investment offer on Thursday. They want to invest 15 billion rupees ($228 million), or 156 rupees per share, for a stake of about 18.5 percent.

The advisory committee is expected to give its recommendation to the board on April 26.

    The keen interest in Fortis comes as companies and investors look to tap soaring demand for private healthcare in India against the backdrop of a stretched public healthcare system.

    Private hospitals could also be boosted from Prime Minister Narendra Modi’s plans to implement a healthcare programme aimed at providing insurance cover to about half of India’s population.

    Fortis, which runs about 30 hospitals in India, said in a statement here on Thursday that the evaluation committee will be chaired by PricewaterhouseCoopers India's former chairman and CEO Deepak Kapoor.

    Fortis grew rapidly for several years but has lately struggled with insufficient cash and increased debt, while regulators investigate allegations that its founders took funds without board approval. The founders, who have since left the company, deny wrongdoing.

    Standard Chartered Bank, financial adviser to Fortis, will assist the advisory committee and the board, Fortis said.

    Fortis shares closed 2.5 percent up at 148.45 rupees.

    Reporting Krishna V Kurup, Arnab Paul and Aby Koilparambil in Bengaluru; Writing by Sayantani Ghosh; Editing by Biju Dwarakanath and David Goodman

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