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New Delhi: Shareholders of Fortis Healthcare have voted to approve its proposed $1 billion deal with Malaysian healthcare group IHH Bhd, the company told stock exchanges late on Tuesday.
The approval clears the way for IHH to pick up controlling stake in the cash-strapped hospital chain by initially infusing around Rs4,000 crore for equity shares at Rs 170 apiece and subsequently initiating an open offer for additional stake.
As per the proposal, IHH would have rights to control two-thirds of the seats on the Fortis board.
The shareholders have also voted in favour of a second proposal to declassify Malvinder and Shivinder Singh as promoters of Fortis and name IHH subsidiary NTK Pvt Ltd in their place.
The Singh family and companies controlled by them, which together hold less than 1% stake in the hospital group now from over 50% during the quarter ended March 2017, will now be included in the public shareholders' category.
The money infused through the Fortis-IHH deal is expected to meet Fortis' short term and long term cash requirements.
This includes acquiring assets from Singapore-based Religare Health Trust and providing an exit to private equity investors in SRL, Fortis' diagnostics arm.
Fortis had been trying to lock down a deal for the last two years and IHH was previously also in talks to purchase the Singhs' controlling stake in the hospital chain.
However, Daiichi Sankyo's ongoing litigation to enforce a Rs3,500 crore arbitration award against the brothers and the Japanese firm's several attempts to block them from selling their stake in the company had caused IHH to back out of advance stage talks in June 2017.
Following a change of it's board and offers by several suitors this year, including Sunil Kant Munjal with Anand C Burman, Radiant Life Care backed by KKR and Ranjan Pai-promoted Manipal Health Enterprises, backed by TPG Asia, Fortis proposed IHH's offer for shareholder approval.
Daiichi is currently engaged in a court battle against Fortis and the Singhs to stall this deal, claiming that the hospital chain and companies controlled by the brothers are a "single economic entity".
It has told the Delhi High Court that once shareholders voted to de-classify the Singh family as promoters, their direct connection with Fortis would be cut, leaving Daiichi "with nothing".
