Fortis buys stake in Malar Hospitals

Fortis Healthcare Limited, the country’s second-biggest health-care provider by market value, is buying Malar Hospital in Chennai, expanding into the southern part of the country for the first time.

International Hospitals Ltd, a wholly-owned subsidiary of Fortis Healthcare, will buy 28 per cent of the equity capital of Malar Hospitals Limited (MHL) from the promoters and an additional 18 per cent by way of preferential allotment.

Seven per cent will be acquired by Oscar Investments Limited. Up to 20 per cent could be acquired through an open offer.

The equity value of MHL, which made its initial public offering in 1992, on a 100 per cent basis stands at Rs 42 crore. The promoters hold about 30 per cent of the 13.9 million shares and the balance is with the public and institutions.

“The acquisition cost per bed for us comes to Rs 32 lakh,” said Shivinder Mohan Singh, CEO and managing director, Fortis Healthcare. “The equity value to the turnover is 1.6 times for Malar, whereas our market cap is 2.65 times. We have picked up the company at Rs 30 per share.”

The 180-bed facility, which was operational in 1995, has three operation theatres and a pathological laboratory.

“Malar is renowned in the south and we are very happy to have acquired the brand. The move will help us in our rollout in south India,” Singh said.

Singh said that Malar, a multispecialty hospital with a focus on mother-child care, may be turned into a superspecialty institution in line with the company’s plans for Chennai.

Over the next six weeks, Fortis will work out the intricacies of the acquisition and decide on further investment that would be required to revamp the hospital.

The MHL acquisition takes Fortis’ total bed strength to 2,200, of which 1,600 are already operational.

Fortis, which runs 12 hospitals in north India, said it plans to operate 40 hospitals with 7,000 beds by 2010 as it seeks to meet demand for high-quality health care. Fortis expects to spend about $500 million on expansion, Singh said last month.

(Source: Economic Times