IHH said to propose up to $1.3 billion Fortis bid to top TPG


IHH Healthcare Bhd. has proposed a potential bid of as much as $1.3 billion for Fortis Healthcare Ltd. that tops an offer from a TPG-backed consortium, according to people with knowledge of the matter, opening a possible takeover battle for India’s second-largest hospital chain.

Asia’s largest hospital operator sent a letter to the Fortis board Wednesday saying it may be willing to pay as much as 160 rupees per share to acquire control of the Indian company, the people said, asking not to be identified because the information is private. It has asked the Fortis board for some time to update its due diligence before making a formal bid, the people said.

The Kuala Lumpur-based company’s bid comes just a day after TPG-backed Manipal Health Enterprises Pvt sweetened its offer to hive off Fortis’s hospital operations and merge them with its own business. Manipal said its revised plan gives Fortis shareholders 155 rupees per share in value, up from 140 rupees earlier.

Fortis shares jumped as much as 4.6 percent, touching a three-week high. IHH shares gained as much as 0.8 percent.

The potentially competing bids are the latest twist in the Fortis saga, with India’s fraud watchdog and stock regulator investigating the company after Bloomberg News reported the company’s founders took at least 5 billion rupees out of the firm without board approval. Brothers Malvinder Singh and Shivinder Singh have resigned from the company and have lost control of their shareholding due to mounting debt.

‘Bidding War’

Kuala Lumpur-based IHH told the Fortis board it wants to work with them on a friendly offer, according to one of the people.

“A bidding war is a positive development,” said Nandita Agarwal Parker, managing partner at Karma Capital Management LLC, which holds a minority stake in Fortis. “The board will have to act quickly. Investors need to evaluate the bids in context of all of this and the strategic fit and value add.”

No final decisions have been made, and there’s no certainty IHH will proceed with a bid, the people said. A representative for IHH declined to comment, while a spokesman for Fortis said he couldn’t immediately comment.

Manipal’s controlling shareholder Ranjan Pai said in an interview Wednesday the reason he was not buying Fortis outright was because of the potential liabilities posed by the investigations. IHH is planning a cash offer for Fortis shares, people with knowledge of the matter said Wednesday. If the approach is rejected by the Fortis board, IHH will consider taking its offer directly to the Indian company’s shareholders, according to the people.

IHH had engaged in talks early last year to invest in Fortis, people with knowledge of the matter said at the time.