The debt-ridden Wockhardt Hospitals on Monday signed an agreement to divest eight hospitals -- four super speciality hospitals, three satellite hospitals and one medical institute each in Mumbai, Bangalore and Kolkata -- to Fortis Healthcare for Rs. 909 crore.
The agreement and the consideration include the Kolkata and Bangalore hospitals which are under construction for Rs. 190 crore. The deal transfer is expected to be completed by December.
Addressing the media here, Wockhardt Chairman Habil Khorakiwala said, “Around Rs. 500 crore would be used to repay the debt on the books of Wockhardt Hospitals and the balance would be used for our other hospitals and our expansion plans.”
Wockhardt Hospitals’ initial public offering (IPO) about 18 months ago failed to elicit investor response and was withdrawn.
For Fortis, the acquisition is being financed through a mix of debt and equity. The company has announced a rights issue for next month totalling Rs. 350 crore to part finance the acquisition.
The deal is the largest in the Indian healthcare sector to date eclipsing the earlier one of Escorts Heart Institute for Rs. 585 crore, also by Fortis Healthcare in 2005. Wockhardt Hospitals will, however, continue to retain its association with Partners Harvard Medical International (PHMI), a subsidiary of Harvard Medical School.
Fortis Healthcare is a leading chain of private hospitals with a network of 28 hospitals.
Fortis and Religare Enterprises Group Chairman Malvinder Mohan Singh said, “this partnership will enable the vast pool of medical talent and quality healthcare infrastructure under the Fortis network to deliver a superior value proposition. It will give us a pan-India presence and will augment bed capacity by 1,902 beds (including 534 beds in two greenfield projects of Bangalore and Kolkata). With the acquisition, the aggregate bed capacity of the Fortis Network will go up to 5,180 beds spread over 38 hospitals. This will easily meet our objective of reaching 6,000 beds with 40 hospitals by 2012 for which we had a capital expenditure plan of Rs. 1,500-1,600 crore. We are opening a 350-bed hospital in Shalimar Bagh, west Delhi later this year and a 400-bed facility in Gurgaon over the next 14 months.”
On the strategic fit, Mr. Singh said, both companies had more than 50 per cent of their services dedicated to cardiac care, orthopedics and neurosciences. Post-acquisition, Fortis will have a talent pool of 9,250 personnel including 1,575 doctors and 5,000 nurses and paramedics. It will also take in the senior management of Wockhardt Hospitals headed by Vishal Bali and around 12 seniors.
To retain 7 hospitals
Post-consummation of the deal, Fortis will rank as the leading private healthcare provider in several key states such as Delhi, Maharashtra, Karnataka, Punjab, Haryana, Rajasthan and Uttar Pradesh.
Wockhardt will retain its seven brownfield hospitals in Rajkot, Surat, Nasik, Nagpur and Hyderabad. In addition, it has three community hospitals in Bhavnagar, Goa and Vashi in Mumbai.
According to Mr. Khorakiwala, “Wockhardt Hospitals’ plans include a multi-speciality hospital in central Mumbai in a year, another in Juhu, Mumbai and one each in Madhya Pradesh, Uttar Pradesh and Bihar.”