India's Fortis gives up battle for Parkway

India-based hospital operator Fortis Healthcare said yesterday that it has agreed to sell its entire stake in Singapore-listed Parkway Holdings to Integrated Healthcare Holdings (IHH), thus abandoning its own attempt to take control of the Singapore company. Parkway operates hospitals primarily in Malaysia and Singapore, but also has selected interests in Brunei, India and China.

Fortis had earlier said that a combination between its own operations with those of Parkway would create a leading healthcare services provider in Asia with 68 hospitals and close to $1 billion in annual revenues.

The decision by Fortis to throw in the towel came after IHH, which is owned by Malaysian sovereign investment company Khazanah Nasional, said earlier in the day that it would raise its offer to Parkway's shareholders to S$3.95 a share from S$3.78. It also changed the nature of its offer from a partial offer to a voluntary general offer, meaning it is now willing to buy all the shares it doesn't already own. Based on the new offer price and the fact that IHH and parties acting in concert already own 23.9%, the revised offer could amount to as much as S$3.5 billion ($2.6 billion).

When Khazanah made its initial bid on May 27, it only offered to buy 313 million shares, which would bring its total holding in the company to 51.5%.

By comparison, Fortis, together with a company owned by its controlling shareholders, Malvinder Mohan Singh and Shivinder Mohan Singh, on July 1 launched a general offer for the 74.73% that it didn't already own at a price of S$3.80 per share. If accepted in full, the acquisition would have cost the buyers approximately S$3.2 billion ($2.3 billion).

After announcing that it would accept Khazanah's revised offer, Fortis withdrew its own general offer for Parkway with immediate effect.

"After considered and deliberate discussions, we have decided to divest our strategic stake in Parkway and have reached an agreement with IHH to accept their voluntary general offer," Malvinder Mohan Singh said in an announcement. "Our decision to exit our investments took into account all stakeholders of Fortis. It was made after careful assessment in light of other growth opportunities available to us across the region and globally."