Fortis Healthcare Ltd. (FHL) said that its board has approved demerger of its hospital business, which will be acquired by Manipal Hospitals and TPG Capital, along with the sale of 20 per cent stake in diagnostics chain SRL Ltd., in an Rs 3,900-crore deal.

In a late night announcement after a marathon meeting during the day, the healthcare chain said its board has given nod for the demerger of its hospital business into Manipal Hospital Enterprises Pvt. Ltd.

"The Board has also approved the sale of its 20 per cent stake in SRL Ltd. to Manipal Hospitals. The resultant entity Manipal Hospitals will be a publicly traded company listed on NSE and BSE. The remaining FHL will be an investment holding company with 36.6 per cent stake in SRL," the company said in a statement.

The company further said, "As part of the proposed transaction, Dr. Ranjan Pai (CEO and MD of the Manipal Education and Medical Group) and TPG will invest Rs 3,900 crore into Manipal Hospitals. The funds will be utilized by Manipal Hospitals to finance the acquisition of 50.9 per cent stake in SRL (20.0 per cent from FHL and 30.9 per cent from other investors for which discussions are currently underway)."

Manipal Hospitals is a part of Manipal Education and Medical Group (MEMG), and has been backed by TPG, a leading US-based global alternative asset firm and experienced healthcare investor since 2015.

"In addition, the investment will support the proposed acquisition of hospital assets owned by RHT Health Trust (RHT) and the growth of the hospitals and the diagnostics businesses," it added.

Merger Deal

As part of the deal, when the demerger becomes effective, for every 100 shares of FHL held by a shareholder, the shareholder will receive 10.83 shares in Manipal Hospitals (the resultant combined hospitals business).

Creation of largest healthcare provider in India

FHL said the combination of Manipal Hospitals and Fortis Hospitals will result in the creation of the largest provider of healthcare services in India by revenue with 41 hospitals in India and 4 hospitals overseas and over 11,000 installed bed capacity, including teaching hospital beds of Manipal Hospitals.

It will have over 4,200 doctors, more than 9,300 nurses and 11,400-plus other employees across India, the statement added.

The proposed transaction is subject to shareholders' approval, creditors' approval, applicable regulatory approvals (including Competition Commission of India, SEBI, stock exchanges and National Company Law Tribunal (NCLT) and other customary conditions precedent, it added.

Inputs from PTI