India - Fortis Healthcare will pay $665 mn to buy Singapore-based sister firm

Fortis Healthcare India will acquire the international hospital assets of its promoters for $665 million (approximately Rs 3,300 crore) in an all-cash deal.

The board of directors took the decision on Tuesday after a committee of independent directors valued the international hospital operations of the privately held Singapore-based Fortis Healthcare International at $695.7 million (approximately Rs 3,427 crore).

The valuation was based on the “fair value recommendation by Haribhakti & Co (an affiliate of BDO International), an independent valuation agency appointed for the purpose”, a Fortis statement said.

Fortis Healthcare, owned by Malvinder Singh and Shivinder Singh, agreed to a lower price. The company board had in September approved the buyout, without taking a decision on the terms and valuation of the deal.

“In a market that is characterised by scarcity of high quality assets, Fortis International has been successful in building a portfolio of high quality assets, which have dominant positions in their respective markets, ” said Malvinder Singh, group chairman, Fortis Healthcare.

Fortis Healthcare International is present in nine countries with a multi-vertical presence in primary healthcare, day care speciality healthcare, hospitals and diagnostics.

The combined entity will become India’s largest healthcare player in terms of bed capacity and number of hospitals. The combined network will have 74 hospitals, 12,000 beds, 580 primary care centres, 191 day care speciality centres, 190 diagnostic centres and 23,000 employees in the Asia-Pacific region.

Stock market analysts welcomed the move saying the valuation and the deal were not negative for Fortis Healthcare. They, however, cautioned that integration of the international operations spanning several countries will make the company’s structure complicated for investors to track.

“Unlike the pharmaceutical companies, which have a predominant presence in India as far as production is concerned, the healthcare business is an independent venture in each country. It will be extremely difficult for investors to track the changes in markets such as Vietnam or Australia in case of healthcare operations,” a Mumbai based analyst said.

Fortis stocks closed about four per cent higher at Rs 128.95 a share on Bombay Stock Exchange on Tuesday.

The acquisition will be subject to relevant regulatory approvals in certain jurisdictions and is expected to be completed by mid-December.

BS Reporter / New Delhi

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