SC puts Fortis Healthcare sale to IHH on hold over Daiichi dues
14 Dec 2018
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The Supreme Court today ordered status quo on the Rs4,000-crore sale of Fortis Healthcare Ltd to Malaysian group IHH Bhd after Japanese pharma company Daiichi Sankyo sought a stay on the sale as Fortis promoters, the Singh brothers, failed to fulfil their commitment to pay the drug maker as per the Delhi High Court orders.
Daiichi Sankyo had moved the SC in a contempt plea against Malvinder and Shivinder Singh, alleging the former promoters — brothers Malvdinder and Shivinder Singh — violated undertakings and court orders.
The Supreme Court, which took up the petition for hearing for the first time today, put the sale on hold and issued notices to Singh brothers and Fortis Healthcare.
The three-judge bench headed by Justice Ranjan Gogoi also issued notices to Indiabulls Housing Finance Ltd and other holding companies of the Singh brothers.
Daiichi’s lawyers argued in court that the Singh brothers created encumbrances on their shares even after the court order.
On 13 November, Fortis Healthcare said it had issued 235.3 million equity shares through preferential allotment to IHH Healthcare Berhad for around Rs4,000 crore. The allotment was done at Rs170 per share giving IHH 31.1 per cent stake in the company.
The Malaysian firm was to acquire an additional 26 per cent stake in Fortis Healthcare through an open offer commencing on 18 December and closing on 1 January 2019.
Northern TK Venture Pte Ltd together with IHH Healthcare Berhad and Parkway Pantai Ltd had made an open offer to the equity shareholders of Fortis Healthcare to acquire up to 197 million shares, representing 26 per cent of the expanded voting share capital, at a price of Rs170 per share payable in cash, the letter said.
Fortis Healthcare shareholders had, in August, backed the deal with IHH as the deal was superior to rival TPG-Manipal’s offer.
As per the criteria set by the Fortis board, the buyers had to make a minimum investment of Rs1,500 crore into Fortis Healthcare by way of preferential allotment apart from having a plan for funding the acquisition of RHT Health Trust (RHT) and a plan for providing an exit to private equity investors of diagnostic arm SRL.
Competition Commission of India (CCI) also approved the IHH Healthcare’s acquisition of a controlling stake in Fortis Healthcare on 31 October.
Shares of Fortis Healthcare slumped as much as 7.6 per cent to Rs140 apiece after the court pronounced its order.
