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Fortis takeover, Act II: Board to Meet on May 30 to Decide on Next Steps

The Munjal-Burman combine, the investor recommended by the erstwhile board for taking over Fortis Healthcare India Ltd (FHIL), on Monday wrote to the Fortis management to break the gridlock and consider all the binding bids made to the board by both IHH Berhad and Manipal-TPG. Three Fortis board members – Harpal Singh, Sabina Vaisova and Tejinder Singh Shergill – had resigned last week, two days before the extraordinary general meeting called on May 22 by minority shareholders. Brian Tempest, the only remaining board member, was removed. Four new board members – Rohit Bhasin, Suvalakshi Chakraborty, Ravi Rajagopal and Indrajit Banerjee –previously taken as independent directors, were inducted on a joint representation by East Bridge capital Masters and National Westminister Partners representatives of the Jupiter India Fund. The expert advisory committee of Deepak Kapoor, former chairman of the board and chief executive of PwC India, and Lalit Bhasin, president of the Society of Indian Law firms and managing partner of Bhasin and Co, remains the same. Previously, they were advised by a representative of Standard Chartered Bank and legal advice was given by Cyril Amarchand Mangaldas. Another independent financial advisor, Arpwood Capital, was appointed earlier as an observer by the board.

Whether or not the board will now follow the same procedure is yet to be decided. Thanks to shareholder activism, an asset driven to the ground in the past year now seems to be gaining some ground. Once the Singh brothers resigned from the board, the shadow of Daiichi moved away from the beleaguered hospital, struggling to meet operating capital. When the board decides to recommend an offer, shareholders will vote on it. IHH Berhad, which has been biding its time since last year, started with a non-binding offer that changed to a binding one, and sent a revised offer by May 9. It is currently waiting for the board to reconsider it. Manipal-TPG, which had triggered an action since its deal was made public on March 27, probably did not foresee the turmoil it would have to face. It also gave a revised offer on May 23. – Business Standard

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