Category: India

Race for Fortis: the story so far

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As competition heats up ahead of the Advisory panel meet today, Manipal -TPG improved its binding bid for Fortis Healthcare.

In what could be a compelling development for shareholders, Manipal proposed an open offer to public shareholders for buying 26% in the hospital business post its demerger.

The open offer price will not be less than Rs 121 per share for the hospital arm. Manipal also improved the hospital valuation to Rs 6,322 crore from Rs 6,061 crore for a more favourable swap ratio for Fortis, and values the company at Rs 160 per share.

It also offers to buy an additional stake of 5% in diagnostics company SRL to help Fortis meet its fund requirements.

Proposal stated that it had arranged a Rs 750 crore letter of intent (LOI) from ICICI Bank to provide immediate cash to company.

KKR backed Radiant Life Care also put in a binding offer for Fortis Health as the deadline for the bids ended.

Malaysian giant IHH also revised its offer to be eligible for the deal process. Manipal-TPG, Munjal-Burman had already been considered as their bids met the “binding bid” criteria.

Radiant has offered upfront amount of Rs 1,200 crore by buying Fortis Mulund asset.

The bid also states that the asset buy will not restrict any other bidder from participating in the process.

Rest of the offer for buying whole of hospital business including RHT is contingent on due diligence.

Radiant sought three weeks of due diligence for the rest of the offer to be binding in nature.

Diagnostics chain SRL is not part of the deal by Radiant. It proposes to spin off SRL and depending on the value the offer will give an implied value of Rs 170-175 per share for Fortis Healthcare.

Malaysian company IHH has also put in a binding bid offering to give Rs 650 crore, upfront and Rs 3,350 crore post due diligence.

Total offer by IHH stands at Rs 4,000 crore and it values the company at Rs 160 per share.

IHH in its offer has asked for three weeks of due diligence process before they can infuse the rest of the Rs 3,350 crore amount, they have also sought exclusivity of four weeks from the start of the due diligence exercise.

The company’s offer seeks seats on the board of Fortis as part of the deal, and wants to complete a proper financial and legal due diligence process before they go ahead with the full transaction.

The Munjal-Burman offer is a binding bid with no requirement of a due diligence. The offers totals Rs 1,500 crore, out of which Rs 750 crore is upfront.

It’s Rs 1,500 crore offer is divided into two parts, a Rs 500 crore payment via preferential allotment of equity at Rs 156 per share, or a SEBI formula, whichever is higher.

The remaining Rs 1000 crore would be paid via a preferential allotment of warrants at Rs 161.60 per share, or a SEBI formula whichever is higher. They also seek two board seats for this deal to be sealed.

Sources suggest that Manipal-TPG has the “right to match” the highest bidder as part of the agreement with the board.

Fortis Healthcare has instituted an independent advisory board to evaluate the binding bids which will meet on April 25.

The healthcare company’s board will meet on April 26 to take the decision. If Manipal exercises its right, it will need to be given 5 days for matching the highest bid, sources said.

Needs to be seen if Manipal-TPG will exercise its right to match. It will be interesting to see what the Fortis board decides, will it consider due diligence requests.

While TPG-Manipal, Munjal-Burman bids are definitive agreements without any requirement for due diligence, IHH & Radiant have proposed 3 weeks to counduct the diligence process for the deal to be firmed up.

While shareholders like East Bridge and Jupiter have sought to dismantle the present board of Fortis, proxy advisory firm IIAS has cried foul and questioned the entire sale process.

The advisory firm has pushed for a consideration of all the bids and lamented the widening trust deficit between the Fortis board and its shareholders, given this kind of pressure Fortis Board will have to tread cautiously.

All signals suggest a final outcome is unlikely on April 26. The street will take keen note of the developments at Fortis not only because of the deal considerations, but also the transparency, corporate governance and protection of minority shareholders’ right point of view.

It will be crucial to see if the board decision is palatable to the key shareholders whose votes will be the deciding factor for the finalisation of this deal.

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Facebook to ensure that its posts do not sway polls

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Facebook has assured that it will ensure that posts with political implications will be vetted carefully, reported the Business Standard.

As per the report, the firm which is facing the heat over Cambridge data leak said that views on politics and political parties would be vetted to ensure that they don’t sway the polls.

The tech giant was working both internally and through third parties to prevent misinformation from making its way to the platform, the report mentioned.

“We take it very seriously. There is an election integrity effort going on in Facebook. We are dealing with misinformation and disinformation on our service. It is on top of mind for us. We are internationalizing the tools. It is particularly important in the context of elections,” Monika Bickert, vice-president of global product management was quoted as saying in the report.

The action from Facebook comes after allegations emerged about the social media network being used to influence Indian politics. This had led to the firm getting warnings from union minister Ravi Shankar Prasad, who said that the government will not tolerate any data abuse and would respond by enforcing strict action.

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Academic behind Facebook data scandal allege that he is being made a scapegoat

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The academic behind the app that allowed consulting firm Cambridge Analytica to farm the data of some 87 million Facebook users said today he was being scapegoated while the social network was being “mined left and right by thousands” of companies.

Aleksandr Kogan, who teaches at Cambridge University, told a British parliamentary committee that criticism of his work by Facebook showed the US social media giant was in “PR crisis mode”.

“I don’t believe they actually think these things because I think they realise that their platform has been mined left and right by thousands of others,” said the Russian-American scientist, who is now banned from Facebook.

“I was just the unlucky person that ended up somehow linked to the Trump campaign. It’s convenient to point the finger at a single entity,” he said, playing down his own work as of little political value.

Kogan created a personality prediction app through his company Global Science Research (GSR), which offered a small financial payment in return for users filling out a personality test.

Facebook says it was downloaded by 270,000 people, but it also gave Kogan access to their friends, giving him a wealth of information on 90 million users, according to the social media giant’s boss Mark Zuckerberg.

The data was sold to Cambridge Analytica’s parent company. Cambridge
Analytica went on to work on Donald Trump’s 2016 presidential campaign.

However, Kogan told MPs today that the data was too imprecise to build up accurate profiles that could be used to effectively target political Facebook ads.

“One of the biggest points of confusion has been how accurate the personality scores we provided to SCL (CA’s parent company) were,” he said.

“The scores were highly inaccurate. We found that the scores were more accurate than a random guess, but less accurate than assuming everyone is average on every trait.”

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Manipal-TPG revises binding bid for Fortis

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Manipal Hospitals, backed by private equity giant TPG, has revised binding bid for Fortis deal, proposing an open offer to public shareholders for buying 26% in the hospital business. The open offer price is Rs 121 per share.

Under the revision, Manipal has improved the hospital valuation to Rs 6,322 crore against the previous Rs 6061 crore.

The company has also proposed to buy 5% in SRL from Fortis and is arranging Rs 750 crore from ICICI Bank to provide immediate cash.

The Manipal Hospital-TPG consortium retains ‘right to match’ the highest bid for Fortis Healthcare by way of their earlier agreement with the Fortis board.

However, Fortis Board had requested Manipal-TPG to waive of their ‘right to match’, but the group refused to do so.

KKR backed Radiant Life Care also put in binding offer for Fortis Health on April 24 as the deadline ended.

Radiant has offered upfront amount of Rs 1200 crore by buying Fortis Mulund asset. The bid also states that the asset buy will not restrict any other bidder from participating in the process.

Malaysian giant IHH also revised its offer to be eligible for the deal process. Munjal-Burman had already been considered as their bids met the criteria.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Radiant makes binding bid for Fortis Healthcare

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

KKR backed Radiant Life Care put in binding offer for Fortis Health as the deadline for the bids end.

Malaysian giant IHH also revised its offer to be eligible for the deal process. Manipal-TPG, Munjal-Burman had already been considered as their bids met the criteria.

Radiant has offered upfront amount of Rs 1200 crore by buying Fortis Mulund asset. The bid also states that the asset buy will not restrict any other bidder from participating in the process. Rest of the offer for buying whole of hospital business including RHT is contingent on due diligence.

Diagnostics chain SRL is not part of the deal by Radiant. It proposes to spin off SRL and depending on the value the offer will give an implied value of Rs 170-175 per share for Fortis Healthcare.

Malaysian company IHH has also put in a binding bid offering to give Rs 650 crore upfront and Rs 3350 crore post due diligence. Total offer by IHH stands at Rs 4000 crore and it values the company at Rs 160 per share.

IHH in its offer has asked for three weeks of due diligence process before they can infuse the rest of the Rs 3,350 crore amount, they have also sought exclusivity of four weeks from the start of the due diligence exercise. IHH offer seeks to board seats as part of the deal.

IHH wants a proper financial and legal due diligence before they go ahead with the full transaction, they intend to have access to auditors Deloitte and Luthra & Luthra which is conducting an investigation into the alleged fund diversion case.

Munjal-Burman and Manipal-TPG are already in the fray with binding bids. Sources suggest that Manipal-TPG has the right to match the highest bidder as part of the agreement with the board. Fortis Healthcare has instituted an independent advisory board to evaluate the binding bids which will meet on April 25, Fortis board will meet on April 26 to take the decision.

Most bids are partially binding with only a small portion promised as upfront payment but a bulk of deal is still contingent on the due diligence process.

While shareholders like East Bridge and Jupiter have sought to dismantle the present board of Fortis, proxy advisory firm IIAS has cried foul of the entire sale process and asked for a consideration of all the bids. IIAS report lamented about the widening trust deficit between the Fortis board and its shareholders. Given this kind of pressure, Fortis Board will have to tread cautiously.

All signals suggest a due diligence process being granted to all aspirants for maximization of value from the deal. After all, the value has to be palatable to key shareholders whose votes will be the deciding factor for the finalisation of any transaction at Fortis.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Trump says there is a good chance of a trade deal with China

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US President Donald Trump on Tuesday said the United States would likely reach a trade agreement with China and that officials from both sides would sit down for negotiations in a few days.

China has said it would welcome a visit by US Treasury Secretary Steven Mnuchin, who is seeking to resolve a tense trade dispute between the world’s two largest economies after Trump threatened to impose tariffs on Chinese imports.

“China’s very serious, and we’re very serious,” Trump told reporters, adding that Mnuchin would travel to China as part of a delegation requested by Beijing. “We’ve got a very good chance at making a deal.”

Trump, speaking at the White House following a meeting with French President Emmanuel Macron, also said the United States was engaged in serious trade talks with the European Union, adding that U.S.-France trade relations were very good

“I would rather deal just with France,” he said.

Trump also said negotiations with Mexico and Canada over the North American Free Trade Agreement(NAFTA) were proceeding “very nicely.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Alembic snug after latest plant inspections, but street remains cautious

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Alembic Pharmaceuticals’ active pharmaceutical ingredient (API) unit at Gujarat’s Panelav seem to be faring well when it comes to US Food and Drug Administration’s (USFDA) inspections.

The latest inspection of the two API units took place from April 16 to April 23, 2018.

The company has only two API units – one at Panelav and the other at Kharkhadi, also in Gujarat.

The routine inspection concluded successfully as the USFDA issued zero observations to the facilities. This was also the case in June 2016, when the same two units were cleared with zero observations.

Two successful back-to-back inspections (with zero observations) indicate a good compliance level of the plant.

Besides reflecting positively on compliance standards, these units are important for company business too.

While the company do not have an exact plant-wise break-up of the contribution, Panelav unit is the company’s largest API plant.

About 80% of the API capacity is captive – used for in-house production – and the rest is sold. The company also had nine drug master files filed in the first nine months of FY18.

The company’s oral solid unit in Panelav, which was inspected by the USFDA in 2016 and 2018, didn’t enjoy the same zero observations as the API plants.

The oral solids unit was earlier inspected in March 2016, and was issued four observations by the USFDA that were subsequently resolved.

In March 2018, the same facility was again inspected and was issued three observations. While the number of observations is few and there is nothing as serious as data integrity, the street is fearing escalation of the first observation.

This first observation highlights the company’s failure to take corrective and preventive actions on a high number of tests results that were out of specification or invalid. Cases in point: 94% in 2016, 91% in 2017 and 63% in January-March 2018.

While the company has a strong compliance history, the street is cautious, especially because out-of-specification observations are becoming common compliance issues faced by Indian companies.

The fear is an inadequate response or remediation can escalate observations to warning letters or more.

The stakes are even higher as the Panelav solid dosages plant is the only USFDA approved formulation facility (the US contributes 28% of total sales) of the company. Hence, a remediation would be even more critical.

In any case, the next approval will be closely watched due to fears that if the plant issues don’t escalate, it may just be that the pace of approvals (around 9 to 10 expected in FY19) could slow down in the near term.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow