Fortis Healthcare shares witnessed a significant uptick, climbing 3% following a crucial development in its ownership structure. The catalyst for this surge was the Securities and Exchange Board of India (SEBI) granting approval to Malaysia-based IHH Healthcare Berhad to proceed with an open offer for acquiring an additional 26% stake in the Indian hospital chain.

Background of the Deal

IHH Healthcare's involvement with Fortis dates back to 2018 when it acquired a 31.1% stake for ₹4,000 crore. This acquisition was to be followed by an open offer worth ₹3,300 crore, initially scheduled for December 2018. However, legal complications involving Daiichi Sankyo and Fortis' former promoters, the Singh Brothers, led to a prolonged delay.

Legal Hurdles Cleared

The path for the open offer was finally cleared by the Supreme Court in September 2022, subject to SEBI's approval. This recent green light from SEBI marks a significant milestone in the long-drawn process.

Financial Implications

The original open offer price in 2018 was set at ₹170 per share. However, Fortis' share price has seen a remarkable appreciation since then:

At current market prices, the size of the open offer would amount to approximately ₹19,308 crore, significantly higher than the initial ₹3,300 crore planned in 2018.

Recent Performance

Fortis Healthcare's stock has shown strong momentum:

This recent approval and the subsequent share price movement reflect positive investor sentiment towards Fortis Healthcare. The completion of this long-pending open offer could potentially lead to a change in the company's ownership structure, which investors will be keenly watching in the coming days.

As always, investors are advised to conduct their own research and consider their financial goals before making investment decisions based on this development.

In a significant development for the Indian healthcare sector, IHH Healthcare Berhad has received approval from the Securities and Exchange Board of India (SEBI) to proceed with open offers for Fortis Healthcare Limited and its subsidiary, Fortis Malar Hospitals Limited. This approval marks a crucial step forward in a transaction that has been in regulatory limbo since 2018.

Transaction Details

The approved transaction consists of three key components:

1. Preferential Allotment: IHH's subsidiary, Northern TK Venture Pte Ltd, will subscribe to 235,294,117 new Fortis shares through a preferential allotment.

2. Fortis Healthcare Open Offer: A mandatory open offer for up to 197,025,660 Fortis shares, representing 26.10% of the expanded voting capital.

3. Fortis Malar Hospitals Open Offer: A mandatory open offer for up to 4,894,308 Malar shares, representing 26.11% of the voting capital.

Regulatory Approval

SEBI's approval letter allows IHH to move forward with both open offers. This decision comes after a protracted regulatory process that began in 2018, highlighting the complexity and duration of the transaction.

Company Disclosures

Fortis Healthcare Limited, in compliance with SEBI Listing Regulations, disclosed this development to the stock exchanges. The company's announcement references an earlier communication from December 17, 2018, underscoring the extended timeline of this corporate action.

Market Impact

The approval is expected to have significant implications for both Fortis Healthcare and Fortis Malar Hospitals. Investors and market watchers will likely be keen to observe how this development affects the shareholding structure and strategic direction of these healthcare entities.

Looking Ahead

While this approval marks a crucial milestone, the completion of the open offers will be the next key event to watch. Fortis Healthcare has committed to keeping the stock exchanges informed of any material developments in this matter.

As this long-awaited transaction moves forward, it could potentially reshape the landscape of India's private healthcare sector, with IHH Healthcare Berhad poised to strengthen its position in the Indian market.

Shareholders and potential investors of Fortis Healthcare and Fortis Malar Hospitals are advised to monitor further announcements for updates on the progress of these open offers.