HABIL Khorakiwala-promoted Wockhardt Hospitals has said that it has agreed to sell 10 of its hospitals to Fortis Healthcare for Rs 909 crore, in the biggest healthcare deal in the country. The acquisition narrows the gap between Fortis and the largest Indian healthcare player, the Apollo group, and also reduces the debt burden for Wockhardt Hospitals.
The deal, which was first reported on August 22, includes eight functioning hospitals of Wockhardt and Rs 190 crore towards capital for two under construction.
The acquisition will enable Wockhardt Hospitals to clear Rs 500 crore it had borrowed earlier to expand its business. “We will use the funds to clear our debt and the remaining will be used for the 10 hospitals that we still have under our control,” said Wockhardt chairman Habil Khorakiwala. “We also plan on adding five more hospitals to the network.”
The deal will give Fortis, the secondlargest healthcare player, an additional 1,902 beds, increasing the Delhi-based company’s capacity to 5,180 beds in 38 hospitals. The move is considered vital for Fortis as it gives the company a pan-India presence, which is beneficial in the large, diversified healthcare market in the country. It also extends Fortis’ inorganic expansion spree, which commenced in 2005 when it bought Delhi-based Escorts Hospitals for Rs 585 crore and followed it up two years later by buying Chennai’s Malar Hospitals for Rs 34 crore.
“We have signed the business transfer agreement but it will take a few months for us to finish the formalities,” said Fortis Healthcare managing director Shivinder Singh. “We expect to execute the deal by December.” Fortis will fund the acquisition through a mix of equity and debt, of which Rs 350 crore would come from the company’s proposed rights issue of about Rs 1,000 crore, currently awaiting Sebi approval. The deal comes more than a year after Wockhardt dropped plans of a public issue due to adverse equity conditions.
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