KUALA LUMPUR (Oct 3): IHH Healthcare Bhd (KL:IHH) said it has received the approval of India’s stock exchange regulator to proceed with its mandatory open offer for a 26% stake each in Fortis Healthcare Ltd and Malar Hospitals Ltd, some seven years after it was first proposed.

The mandatory offer of up to 197.03 million Fortis shares from existing Fortis shareholders was first announced in July 2018, following IHH’s entry as a white knight into Fortis with a subscription of new shares representing a 31.1% stake for about RM2.4 billion.

Fortis owns a 62.4% stake in Malar Hospitals, which operates a healthcare business in Chennai.

The deal had been blocked in court previously, amid a dispute between Fortis’ promoters and founders — Malvinder and Shivinder Singh — and J Daiichi Sankyo Co Ltd, relating to the Japanese pharmaceutical group's acquisition of drugmaker Ranbaxy Laboratories Ltd from the Singh brothers over a decade ago.

In May this year, IHH through its subsidiary raised the damages sought against Daiichi Sankyo by tenfold to over ¥200 billion (RM5.71 billion) for blocking its attempt to make an open offer for Fortis and Malar Hospitals’ shares.  

When the corporate exercise was announced in 2018, according to IHH’s past filing, the Fortis offer was to be priced at no less than 170 Indian rupee or 3,349 crore rupees (RM1.59 billion).

The offer for Malar’s 26% stake was last revised in August 2024 following dividends payout, with the latest about 17.6 Indian rupees (RM8.05) per share, or about 8.6 crores (RM4.08 million).

Shares of both Fortis and Malar have risen in the past seven years as they turned profitable since the pandemic. Fortis climbed over five-fold in the period to 980.4 rupees per share on Friday, while Malar's shares are trading over three times higher at 65.2 rupees apiece.

IHH, which has been led by three different CEOs in the past seven years, saw its share price climb over 17% in the past month, ahead of this announcement. The stock settled at RM8.13 on Friday, after dipping 13 sen or 1.57% from its previous close, giving the group a market capitalisation of RM71.84 billion.

In the financial year ended March 31, 2025, Fortis clocked 809 crores in profit after tax on revenue of 1,655 crores, according to its annual report. It operates 33 healthcare facilities, covering over 5,700 beds and 400 diagnostic labs, its website shows.

Prior to the Fortis acquisition, India was already IHH’s fourth home market, with operations in the country since 2002 across six hospitals and three medical centres totalling 1,600 beds.

IHH came into the picture after Malvinder and Shivinder Singh had to give up their shareholdings as a result of debts and allegations of siphoning funds from the company.

In buying into Fortis, the group beat a number of big names including, Manipal Hospital Enterprises Pvt Ltd in partnership with TPG Capital; Sunjil Munjal of Hero Enterprises in a joint bid with the Burman family of Dabur; China’s Fosun Health Holdings Ltd, an arm of Fosun International Ltd; and Mumbai’s Radiant Lifecare backed by buyout firm KKR, The Edge reported.