Fortis Hospitals - IHH Open offer

Q&A: Questions & Answers
1

So, IHH has received the go ahead from the Supreme Court to proceed with their open offer to acquire an additional 26% stake in Fortis Hospitals. This open offer was original scheduled for December 2018 but due to various legal issues, it was put on hold until now.

Now, IHH has made the open offer for Fortis hospitals share at 2018 prices - i.e. INR 170 + INR 53 as interest from 2022 to present (approximate prices).

Fortis Hospital’s CMP is INR 1051.8 as of typing this. Any shareholder selling at the open offer price will effectively lose ~80% of their market value. So, in all likelihood, share holders will not sell.

What is the point of this open offer? Is this required from a regulatory perspective as mandatory? If not, What does IHH gain by making this open offer when it is, realistically, likely to fail?

3 Likes
2

Just a Regulatory Formality. Dont think it impacts anyone, even IHH. Also Fortis Malar stock has similar open offer.

Classic Example of regulations delinking from price due to delays, etc.

On the positive side, all the parties can move on, since the legal overhang is gone. IHH can now sell it with no issues. Its 7-8x for them.

3

I had the same thought. The open offer is a mere formality due to regulatory requirements. They’re not expecting it to be successful

4

similar case in Samaan capital ; open offer at 139 against CMP of 165