KUALA LUMPUR (Feb 27): IHH Healthcare Bhd has maintained that the ongoing dispute between the Singh brothers (Malvinder and Shivinder), and Daiichi Sankyo does not involve Fortis Healthcare Ltd, and that its 100-day turnaround plan for Fortis is on track to meet stated milestones.
“I would like to state that Fortis is not involved in the dispute. The suit is between the [Singh] brothers and Daiichi [Sankyo], and the brothers are no longer promoters of Fortis,” IHH managing director and chief executive officer Dr Tan See Leng said in a teleconference today.
He observed that the Singh brothers held a meagre 0.16% of Fortis as at Dec 31, 2018. To the best of his knowledge, they no longer hold any units in Singapore-listed RHT Health Trust, whose assets were acquired by Fortis last month for a reported RM2.69 billion.
“As far as the hearing itself is concerned, they have asked the [Singh] brothers to appear and submit their affidavits. We wouldn’t know what the affidavits would be, or how it would impact us. I think it’s a little premature. But suffice to say that at this particular (point) in time, we already have control of the board. The majority (five out of the eight) of its directors are our nominees.”
Tan acknowledged that the dispute would not be a “non-event” to IHH, but said the group continues to make progress and in-roads with Fortis, with most initiatives set out in its 100-day turnaround plan on track.
“We continue to believe that the Fortis acquisition is a significant and transformational opportunity for the group… The pending open offer has no bearing on the fact that we are already the controlling shareholders of Fortis with board control at 31%.”
IHH intends to increase its stake in Fortis by acquiring up to 197.03 million, representing about 26% of the expanded voting share capital, via an open offer of not less than 170 Indian rupees (or RM9.70 currently) per share.
Tan was commenting on the outcome of a Supreme Court hearing on Tuesday (Feb 26) in India, wherein the court directed former Ranbaxy Laboratories Ltd promoters Malvinder and Shivinder, to appear before it on March 14 in relation to their disposal of a controlling stake in Fortis to IHH.
The court decision appears to add to the muddle surrounding IHH’s acquisition of the Fortis stake.
Although in November 2018, IHH announced it had completed the acquisition of a 31.1% stake in Fortis — its US$1.1 billion (RM4.5 billion) bid had eclipsed that offered by its rivals — the Supreme Court ordered a stop to the sale on Dec 14 last year, after the Japanese drugmaker Daiichi Sankyo requested the court to block the sale to IHH, pending Daiichi’s enforcement of an arbitration award against the Singh brothers.
According to India’s The Economic Times, Daiichi was in the midst of enforcing a Rs3,500 core arbitration award against the brothers, which it had won in an international tribunal in April 2016, after the brothers were found to have concealed information that their company Ranbaxy was facing an investigation by the US Food and Drug Administration and the Department of Justice, while selling their shares in Ranbaxy to Daichii.
However, Fortis maintains Daiichi’s grounds were unfounded as Fortis was neither a party in the arbitration award, nor in the disputes between Daiichi and the brothers.
A report by The Economic Times said Daiichi alleged that the brothers and their holding company RGC were in violation of their undertakings to the court that they had sufficient unencumbered assets to satisfy the award, as the undertakings were given on the basis of their shareholding in Fortis.
This shareholding depleted over time because of a top-up agreement with lenders, which had earlier not been disclosed, Daiichi argued, amounting to “grossest contempt, in fact perjury.”
Despite the hurdles, Tan has maintained that IHH is committed to its India investment.
IHH closed four sen or 0.7% lower to RM5.66 today, valuing the company at RM49.63 billion.