The Fortis group is acquiring 48% stake in Chennai-based Malar Hospital for around Rs 42 crore. This marks the group's first entry in the south.
At present, Fortis has a network of 12 hospitals primarily in the north, and 16 satellite and heart command centres.
The acquisition will be done through International Hospital Ltd, a wholly-owned subsidiary of Fortis, and group company Oscar Investments Ltd (OIL). In the first tranche, International Hospital Ltd will buy the promoters holding of 28% at Rs 30 per share. The total equity of the company is Rs 1.39 crore. The hospital was promoted in 1989 by a group of doctor's headed by late Dr S Ramamurthy, and his wife now runs the hospital.
Shivinder Mohan Singh CEO and MD, Fortis Healthcare told newspersons here on Friday, “Malar Hospital is well established in Chennai with a strong brand equity and is centrally located. We will follow the same strategy in Chennai of setting up hubs and spoke hospitals as we have done in Delhi”.
Additionally, International Hospital along with Oscar Investments will inject Rs 14 crore as loan, which will be converted into 25% equity, subject to approval by Malar shareholders. OIL will acquire approximately 7% (of the expanded equity capital), while International Hospital will have 18%.
Post conversion, International Hospital will hold 23% and an additional 18% equity, and another 7% held by Oil, taking up the total equity to nearly 48%.
The acquisition will be funded through internal accruals and debt, he added.
IHL and OILm would make an open offer to the shareholders of Malar Hospitals, as per the Securities and Excahnge Board of India guidelines.
The group is expected to acquire a majority shareholding in the company after the open offer. Malar Hospital with 180 beds is a multi-speciality hospital focusing on comprehensive medical care, says a company statement.
Fortis plans to up its capacity to 40 hospitals and 6,000 beds by 2010, from the existing 12 hospitals and 2200 beds.
Source: Times of India