Fortis Healthcare’s hospital business will be hived off and merged with Manipal Hospitals.  It will also sale its 20.0% stake in SRL, a subsidiary of Fortis healthcare which is primarily involved in providing diagnostics services, to Manipal Hospitals for Rs720 crore.

According to the press release issued by Fortis Healthcare, Ranjan Pai and TPG will invest INR 3,900 crore into Manipal Hospitals. The funds will be utilized by Manipal Hospitals to finance the acquisition of 50.9% stake in SRL (20.0% from Fortis Healthcare and 30.9% from other investors for which discussions are currently underway). In addition, the investment will support the proposed acquisition of hospital assets owned by RHT Health Trust and the growth of the hospitals and the diagnostics businesses.”

Key shareholders of the resultant entity will be Ranjan Pai and TPG Capital and the resultant entity Manipal Hospitals will be a publicly traded company listed on NSE and BSE. The remaining Fortis Healthcare will be an investment holding company with 36.6% stake in SRL.

Commenting on the transaction, Bhavdeep Singh, FHL CEO said “As an organization we are thrilled with this transaction as it enables us to take the next bold step into our future. Much has transpired over the past 12 – 18 months at Fortis and in the healthcare industry at large; it’s now time to get back to working with our doctors and nurses to saving and enriching lives. We believe Manipal has built a terrific franchise and team and the coming together of our two organisations will be transformational for the healthcare industry.”

Ranjan Pai, Chairman, Manipal Education and Medical Group (of which Manipal Hospitals is a part), said, “The companies make a compelling strategic fit in terms of complementary geographies, clinical strengths as well as a shared commitment to providing outstanding patient care. As the largest hospital operator in India, this will be a platform benefiting all, from the communities we serve, to our capable employees and our investors. We have an excellent opportunity to leverage this strength to expand coverage and service delivery, in response to the burgeoning demand for world class healthcare.”

Upon obtaining all approvals, when the demerger becomes effective, for every 100 shares of Fortis Healthcare the shareholder will receive 10.83 shares in Manipal Hospitals.

Fortis Healthcare Limited currently operates both in hospitals and diagnostics businesses. It operates a network of 34 hospitals across the country and internationally. It also has presence in Dubai, Mauritius and Sri Lanka.

Manipal Hospital Enterprises Private Limited has a strong presence in South India across 11 hospitals including one hospital in Malaysia.