Fortis splits hospital and diagnostics businesses

Healthcare major Fortis will consolidate its hospital business under Fortis Healthcare and the diagnostics businesses under Fortis Malar in a demerger and demerger process approved by its board of directors.

As per the plan, announced by CEO Bhavdeep Singh, on Friday, the diagnostics business, which includes popular subsidiary SRL Ltd, will be demerged from the listed entity Fortis Healthcare Ltd (FHL) and merged with another majority-owned subsidiary Fortis Malar Hospitals (FMH).

Similarly, Fortis Healthcare will buy out for Rs43 crore the hospital business under Fortis Malar, which operates a hospital in Chennai.

''The hospitals and the diagnostic businesses have distinct operating models and given the macro-fundamentals of the healthcare industry, each of these provide a strong growth opportunity in the foreseeable future,'' a Fortis release pointed out.

Also, Fortis said, the restructuring would lead to a simpler organisational structure that would be helpful for shareholders and investors. ''We believe this will unlock immense value for all the shareholders.''

''The appointed date for the slump sale, demerger and merger under the composite scheme is opening of business on 1 January 2017,'' the company said in a statement filed with the Bombay Stock Exchange.

''We believe this will unlock immense value for all the shareholders. As a result of the new synergistics groupings, both the hospitals and diagnostic businesses will benefit from greater clarity, a stronger focus and an independent growth trajectory,'' said Malvinder Singh, executive chairman, Fortis Healthcare

''Equally, this will enable the accelerated pursuit of their respective business goals while empowering them to reach their fullest potential,'' Singh added.

On completion of the demerger, Fortis Malar would issue and allot to equity shareholders of Fortis Healthcare 0.98 fully paid-up equity shares of Rs10 each for every one equity share of Rs10 each held by them in Fortis Healthcare, the release added.

Further, the equity shareholders of SRL will be issued and allotted 10.8 equity shares of Rs10 each of Fortis Malar for every 1 equity share of Rs10 held by them in SRL.

The appointed date for slump sale, demerger and merger under the composite scheme is opening business on 1 January 2017. This will all be subject to statutory and regulatory approvals, Fortis said.