Fortis CEO Bhavdeep Singh says merger with Manipal Hospitals is undervalued

A day after Fortis hospitals inked the deal with Manipal Hospitals and TPG for the merger of its hospitals business, Bhavdeep Singh, the CEO of Fortis Healthcare says that the deal is undervalued. Interacting with journalists, Singh said that “in the recent past Fortis has not been doing well while Manipal has been growing in the last 18 months which is why our valuations are low.”He added that they haven’t been able to focus on the business due to an internal issue, especially with regard to the promoters.He stated that RHT component of the company has been showing an EBITDA in single digits which was one of the challenges while signing the deal. He said, “The total value of the deal is Rs 150 billion.”On whether the deal might face a setback with the anti-trust regulator Competition Commission of India (CCI), Singh said that despite overlaps in certain jurisdictions, they do not expect any negative feedback from the competition regulator. Manipal has a strong presence in the southern part of India. Fortis is present in few southern states like Karnataka.So far as the Singh Brothers are concerned, their holding will be limited to 1 per cent and the new business will be run without the existing promoters. Singh brothers are no longer on the board of Fortis Healthcare.So far as the change in the board of Fortis goes, there might be additions later on during the integration process.

The deal is expected to be completed in the next one year.The Board of Directors of Fortis Healthcare Limited approved merging its hospitals business into Manipal Hospital Enterprises Private Limited, last night. The Board also approved the sale of its 20% stake in SRL Limited which is the diagnostic chain to Manipal Hospitals.Dr. Ranjan Pai and TPG will invest Rs 39 billion into Manipal Hospitals. The funds will be utilized by Manipal Hospitals to finance the acquisition of 50.9% stake in SRL. In addition, the investment will support the proposed acquisition of hospital assets owned by RHT Health Trust and the growth of the hospitals and the diagnostics businesses”, Fortis had said in a statement. Dr Ranjan Pai is the promoter of Manipal hospitals.Fortis has 34 hospitals under its name while Manipal Hospitals has 14 under the Manipal brand.business-standard