Fortis Malar Hospitals Ltd, Chennai to divest its business operations to MGM Healthcare Private Limited

Fortis Malar Hospitals Limited ("Company"), a renowned healthcare delivery service provider in Chennai, today announced signing of a definitive agreement for the sale of its business operations pertaining to Fortis Malar hospital situated at Gandhi Nagar, Adyar Chennai ("Malar Hospital") to MGM Healthcare Private Limited ("MGM"), a prominent healthcare delivery service provider, for a sale consideration of approx. INR 45,50,00,000 (Rupees Forty five crores and fifty lacs) (subject to customary closing adjustments as agreed in the definitive agreement).

Adjunct to this transaction, the OPD and radio diagnostics business operations related to the Malar Hospital (including the land and building) and the adjacent land parcels are also being divested by two wholly owned subsidiaries of Fortis Healthcare Limited ("Fortis Healthcare"), namely - Fortis Health Management Limited ("FHML") and Hospitalia Eastern Private Limited ("HEPL") to MGM. Fortis Healthcare owns a 62.7% equity stake in the Company.

The transaction will be an all-cash deal and is expected to be consummated by end of January 2024; subject to certain conditions precedent and closing conditions as stipulated in the definitive agreements including the approvals from shareholders of both the Company and Fortis Healthcare.

The Malar Hospital is approx. a 140 bed facility and has been facing certain legacy issues. Over the past few years, with continuous efforts, several of these issues have been resolved. However, some of the legacy aspects continue to persist which have given rise to certain challenges for the Company and have constrained further investments into the facility. The matter has accentuated the need for the Company to divest its business as a viable and prudent option for its stakeholders.

Additionally, the aforesaid divestment is also a part of Fortis Healthcare's (viz. the largest and majority shareholder of the Company) ongoing portfolio rationalization strategy in order to focus on deepening its presence in select geographic clusters where it has a sizeable presence.

The proposed acquisition is in line with MGM Healthcare's strategy to further expand its presence in Chennai, in addition to its two quaternary care hospitals with a combined bed capacity of approx. 600 beds at present and another 450 bed greenfield hospital under development.

Mr. Daljit Singh, Non-Executive Chairman, Fortis Malar Hospitals Limited commented: "After a number of deliberations amongst the management and the Board, the proposed divestment of business operations of the Malar Hospital seems to be a practical solution in the interest of all stakeholders. Certain legacy issues have persisted for long and have impacted the performance of the facility as also presenting challenges in clinical hiring and retention. Upon consummating the transaction, the Board will endeavor to distribute the available surplus funds to shareholders as appropriate and in the most optimal manner as per applicable laws, rules and regulations."

Dr. Prashanth Rajagopalan, Managing Director, MGM Healthcare Private Limited commented: "Chennai has a deep emotional connection with Malar Hospital. We are determined to restore and advance Malar to its original glory. As a part of our long-term growth and expansion plans, MGM Healthcare has been investing in both greenfield and existing facilities to enhance care and clinical offerings for a broader patient population. This is a testament to our commitment to expanding our reach and enhancing the wellbeing of the communities we proudly serve. The acquisition of Fortis Malar by MGM is a crucial step in our planned capacity expansion nationwide, allowing us to extend our commitment to providing the best in quality, affordable and personalized healthcare. With this acquisition, we would bring our total bed count in Chennai to approx. 800 beds."

For Fortis Healthcare, FHML and HEPL, Saraf and Partners, Law Offices acted as legal advisors; Shardul Amarchand Mangaldas & Co acted as legal advisors to the Company. Veda Corporate Advisors acted as financial advisors for the said transaction.

For MGM Healthcare Private Limited, JSA Advocates & Solicitors acted as legal advisors for the transaction.

Shares of Fortis Malar Hospitals Limited was last trading in BSE at Rs. 69.19 as compared to the previous close of Rs. 70.99. The total number of shares traded during the day was 17430 in over 149 trades.

The stock hit an intraday high of Rs. 72.00 and intraday low of 68.61. The net turnover during the day was Rs. 1226336.00.

Source : Equity Bulls

Keywords

FortisMalarHospitals INE842B01015 HealthcareServices BusinessOperations Divestment MGMHealthcare