IHH Healthcare’s plan to take control of India’s Fortis on hold

PETALING JAYA: IHH Healthcare Bhd’s plan to seek a controlling stake in India’s Fortis Healthcare Ltd has hit another bump, after the Supreme Court of India put a halt to the acquisition of an additional 26% stake in Fortis for RM1.97 billion.

IHH, via Northern TK Venture Pte Ltd (NTK), had in November completed the purchase of 31.1% of Fortis for RM2.35 billion.

In a filing with Bursa Malaysia today, IHH said the Supreme Court of India passed an order directing status quo with regard to the sale of the controlling stake in Fortis Healthcare to Malaysian IHH to be maintained.

“In light of the order, NTK and the persons acting in concert (PACs) will not be able to proceed with the Fortis open offer for the time being until further order(s)/clarification(s)/direction(s) are issued by the Supreme Court of India and/or the Securities and Exchange Board of India,” it said.

IHH said it is evaluating the order and is seeking legal advice on the matter, together with Parkway Pantai Ltd (PPL) and NTK, and will subsequently decide on the future course of action.

The open offer is for the acquisition of an additional 26% stake in Fortis by NTK, which is scheduled to be launched from today until Jan 1, 2019.

It also clarified that IHH, PPL and NTK were not a party to the proceedings before the Supreme Court of India, and that the order does not impact the subscription which was completed on Nov 13.

The Supreme Court of India’s directive came after Daiichi Sankyo Co filed a contempt petition in its dispute against former promoters of Fortis Healthcare, namely, Malvinder Singh and his brother Shivinder Singh.

According to news reports last week, Japanese firm Daiichi sought the court order to stop IHH from acquiring Fortis as the brothers had not fulfilled their commitment to a payment in relation to Daiichi’s acquisition of Ranbaxy Laboratories.

Daiichi is seeking an arbitration award amounting to US$385 million (RM1.6 billion) from the brothers, who had earlier pledged their shares in Fortis to satisfy the award.

On Bursa Malaysia today, IHH closed 5 sen or 0.9% lower at RM5.35 on volume of 1.11 million shares.

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