KUALA LUMPUR (July 13): The proposal by IHH Healthcare Bhd to acquire a controlling stake in Fortis Healthcare Ltd earlier today has valued the India-based healthcare group at INR88.8 billion (RM5.2 billion), said IHH today.

IHH's indirect unit Northern TK Venture Pte Ltd is seeking to subscribe up to 235.29 million new shares in Fortis — representing a 31.1% stake — with an open offer to acquire another 197.03 million shares (26%) from Fortis shareholders at INR170 (circa RM9.98) per share.

In a statement today, IHH said the offer price of INR170 per share implied an equity valuation of 22.3 times Fortis' earnings before interest, tax, depreciation and amortisation (ebitda) for the twelve months ended March 31, 2018.

It is also at a premium of 19.5% to Fortis's closing share price on July 12, 2018 of INR142.15 on the Bombay Stock Exchange of India; and a 15.3% premium to its sixty-day volume weighted average price ended July 12 (VWAP).

As at March 31, Fortis has audited net assets of approximately INR53.17 billion.

The Fortis open offer is not subject to completion of the proposed subscription and will proceed in the event the proposed subscription does not complete, IHH added.

Concurrently, the proposal will also trigger a mandatory cash open offer for 26% stake in Fortis' listed unit Fortis Malar Hospital Ltd (Malar) at INR58 (RM3.40) per share.

This, said IHH, represents an implied valuation of Malar at INR1.09 billion (RM64 million).

"The Malar Open Offer price represents a 13% and 0.8% premium to the closing share price on July 12, 2018 and sixty-day VWAP, respectively," said IHH.

IHH said that post-acquisition, it intends to retain the listing status of both Fortis and Malar on the Bombay Stock Exchange.

"IHH is also supportive of Fortis Healthcare's announced plan to acquire RHT Health Trust, which is listed in Singapore and currently has a portfolio of 12 clinical establishments, four greenfield clinical establishments and two operating hospitals," it added.

According to IHH managing director and chief executive officer Dr Tan See Leng, the group has a 100-day turnaround plan in place to "stabilise Fortis Healthcare" for the latter to "realise its full potential in the long run".

"This acquisition is a natural progression in our expansion and plans across India.

"This win-win combination will make IHH the leading healthcare services provider in India, while giving Fortis Healthcare and its stakeholders certainty and clarity on the future of the group," said Tan.

IHH non-executive chairman Datuk Mohammed Azlan Hashim said: "The acquisition of a controlling stake in Fortis Healthcare, one of the leading healthcare service providers in India, represents a transformational investment for IHH and demonstrates our commitment to invest considerable resources to expand and consolidate our footprint in India."

Trading of IHH shares was suspended from 9.22am to 2.30 today. At 2.43pm, the counter rose 2 sen or 0.34% to RM5.99, giving the group a market capitalisation of RM49.06 billion.