IHH Healthcare Bhd. has asked Fortis Healthcare Ltd. for three weeks to complete due diligence ahead of making a potential binding offer, people with knowledge of the matter said, as the takeover battle for India’s second-largest hospital chain escalates. IHH, Asia’s most valuable hospital operator, sent a letter to Fortis’s board on April 16 with the due diligence request following its cash purchase proposal valuing the company at as much as $1.3 billion, the people said. The letter says IHH is seeking information related to investigations of Fortis by India’s fraud watchdog and stock market regulator, said the people, who asked not to be identified because the information is private.
Suitors including Chinese conglomerate Fosun International Ltd. are vying for Fortis after the company’s founders lost control of their shareholdings due to mounting debt. India’s Fortis said it couldn’t engage the proposal from IHH because it had already entered into binding agreements with TPG-backed Manipal Health Enterprises Pvt., an exchange filling from the Malaysian firm shows.
IHH is also seeking updated financial results and information related to the potential impact of Japanese drugmaker Daiichi Sankyo Co.’s attempts to collect a $550 million arbitration award from Fortis’s founders, said the people. A representative for IHH declined to comment beyond the company’s Monday exchange filing. The board of Fortis will meet Thursday to consider all proposals, a spokesman of the company said in a text message, without specifically responding to queries about IHH’s second letter.
Fosun proposed investing as much as $350 million for a stake in Fortis, according to a letter to Fortis’s board. Fosun said in its non-binding proposal it would invest at a price of up to 156 rupees a share, and would restrict its holding in Fortis to below 25 percent.
Manipal Health offered to spin off Fortis’s hospital operations and merge them with its own in a binding deal valuing the company at about 155 rupees per share. IHH said it’s willing to pay as much as 160 rupees a share in cash, though its offer is not binding and contingent on more due diligence.
Another bid by two Indian business families proposed to jointly invest a total of $190 million through a preferential share allotment, with the first 5 billion rupees submitted as a binding bid of 156 rupees a share, and rest subject to a due diligence in three weeks.