Malaysia-based IHH Healthcare has put on hold its open offer to acquire additional 26% stake in Fortis Healthcare, following Supreme Court of India’s order last week to maintain status quo on the divestment of controlling stake in Fortis.
The order from Supreme Court comes after Japan-based Daiichi Sankyo filed a contempt plea against Fortis Healthcare founders Malvinder Singh and Shivinder Singh for creating encumbrances on 1.2 million Fortis Healthcare shares, thereby violating the court orders.
Managers of the deal in a public announcement stated that “the acquirer (IHH Healthcare) and PACs will not be able to proceed with the Open Offer as per the timeline set out…Once further orders(s) / clarification(s) / direction(s) are issued by the Honourable Supreme Court of India and, the acquirer and PACs will decide on the next steps.”
Following the court’s order, IHH Healthcare in a regulatory filing stated: “The Board also wishes to clarify that IHH, PPL (Parkway Pantai Ltd) and NTK (Northern TK Venture Pte Ltd) were not a party to the proceedings before the Supreme Court of India, and that the order does not impact the subscription which was completed on November 13, 2018 in accordance with applicable law, resulting in IHH through NTK, owning 31.1% of the expanded voting share capital of Fortis Healthcare.”
Through its wholly owned subsidiary Northern TK Venture, IHH was to purchase more than 197 million shares through the open offer at Rs 170 per share.
To increase its holding from the current 31% to 57.10%, the Malaysian company intended to invest up to Rs33bn ($446.7m).
This open offer was slated to begin on 18 December and end on 1 January.
Daily News Analysis quoted Fortis Healthcare spokesperson as saying that the company “is not a party to the judicial proceedings in which the order has been passed. As we have reiterated many times earlier, the ex-promoters are no longer a part of Fortis and the judicial proceedings yesterday were in matters solely related to them – specifically, in connection with the alleged transfer of their shares to Indiabulls Housing Finance Limited, in respect of which contempt proceedings had been sought to be initiated and the transfer itself being sought to be set aside.”
In November, IHH had infused Rs40bn ($565.7m) in Fortis Healthcare for its capital requirements.
Fortis operates about 30 private hospitals in India. IHH Healthcare is the single largest shareholder in the Indian hospital chain.