China's Fosun enters race for Fortis Healthcare with $350 mn offer

The Hong Kong-listed Fosun has now joined the list of interested parties that include TPG-Manipal consortium, Malaysia’s IHH healthcare and Munjal-Burman family are in fray to take control of the hospital chain Fortis Healthcare, India's second largest healthcare provider.

Fosun International, which is aggressive in the pursuit of foreign assets, had last year bought Hyderabad-based injectable drug maker Gland Pharma for $1.09 billion at the height of India-China stand-off at Doklam.

Cash-rich Fosun, which has total assets of over $75 billion, joined the bidding race late on Tuesday.

Fortis Healthcare in an exchange filing late on Tuesday said it has received an unsolicited non-binding expression of interest from Fosun with an offer to inject Rs100 crore within the next 45 days that includes an option of immediately subscribing to convertible debt instruments of the company.

The Rs100 crore funds will be on the condition that Fortis agrees to a one-month period of exclusivity for Fosun to undertake due diligence and negotiate a proposal to acquire stake in the company.

If Fortis agrees to the exclusivity period, Fosun will consider a primary infusion of up to $350 million (approximately Rs2,300 crore), valuing Fortis at Rs156 per share that would enable Fosun to hold around 25 per cent of Foris securities, the filing said.

Fosun said it is aware of Fortis’s immediate cash requirements, strategic plans for consolidation of its real estate assets, and various alternative proposals put forth for the board's consideration and wants to remain a long-term investor.

"We believe our proposal outlined in the letter will best support the company's immediate needs, while supporting the Company and its existing investors at a fair valuation to optimise long term return," Fosun added.

Fosun also said it has sufficient funds for the transaction and would not require any external financing.

Local rival Manipal Health Enterprises, the first to enter the race to take over Fortis, made an offer of about $1.2 billion. It was followed by a $1.3 billion bid by Malaysia’s IHH Healthcare Bhd (IHH).

IHH, one of Asia’s largest healthcare operators, however, said Fortis Healthcare declined to engage with it on its offer.

The boars of Fortis Healthcare will meet today to take a decision on the bids it has received.

Besides last year’s acquisition of Gland Pharma, Fosun’s other major acquisitions include Sinopharm, United Family Hospitals, Luz Saude, Fortress Investment, Kite Pharma, Intuitive Surgical, Henlius and Alma Lasers.