Fortis Healthcare Ltd has announced that it has agreed to sell Fortis Malar Hospital (known as Malar Hospital) in Adyar, Chennai, and adjacent land parcels to MGM Healthcare Pvt Ltd for a sale consideration of about ₹128 crore.
The transaction comprises the following parts. The divestment of the business operations pertaining to Fortis Malar Hospital residing in the listed subsidiary of the company, Fortis Malar Hospitals Ltd, in which Fortis Healthcare owns a 62.7 per cent equity stake. The OPD and radio diagnostics business operations related to Malar Hospital (including the land and building) and the adjacent land parcels are also being divested by two wholly owned subsidiaries of Fortis Healthcare Ltd – Fortis Health Management Ltd and Hospitalia Eastern Private Ltd to MGM.
The transaction will be an all-cash deal and is expected to be consummated by the end of January 2024, subject to certain conditions precedent and closing conditions as stipulated in the definitive agreements, including the approvals from shareholders of both the company and Fortis Healthcare, according to a statement.
The Malar Hospital is a 140-bed facility and has been facing certain legacy issues. Though several of these issues have been resolved, some of the legacy aspects continue to persist.
“After a number of deliberations among the management and the Board, the proposed divestment of business operations of the Malar Hospital seems to be a practical solution in the interest of all stakeholders. Certain legacy issues have persisted for long and have impacted the performance of the facility as also presenting challenges in clinical hiring and retention,” said Daljit Singh, Non-Executive Chairman, Fortis Malar Hospitals Ltd.
The divestment is also part of Fortis Healthcare’s (viz the largest and majority shareholder of the company) ongoing portfolio rationalisation strategy in order to focus on deepening its presence in select geographic clusters where it has a sizeable presence.
“Upon consummating the transaction, the Board will endeavor to distribute the available surplus funds to shareholders as appropriate and in the most optimal manner as per applicable laws, rules, and regulations,” he added.
“Chennai has a deep emotional connection with Malar Hospital. We are determined to restore and advance Malar to its original glory,” said Prashanth Rajagopalan, Managing Director, MGM Healthcare Private Ltd.
“MGM Healthcare has been investing in both greenfield and existing facilities to enhance care and clinical offerings for a broader patient population. The acquisition of Fortis Malar by MGM is a crucial step in our planned capacity expansion nationwide. With this acquisition, we would bring our total bed count in Chennai to about 800 beds,” he added.