Fortis buys 10 Wockhardt hospitals for Rs 909 crore

Fortis buys 10 Wockhardt hospitals for Rs 909 crore

The acquisition will be funded through a mix of debt, equity & internal acruals

Fortis buys 10 Wockhardt hospitals for Rs 909 crore

The acquisition also includes Rs 190 crore towards capital work in progress for projects under construction.

Both the entities have signed a definitive agreement providing for purchase of 8 operating hospitals and 2 hospital projects under construction, while the business transfer is expected to be completed by December-end this year.

While this acquisition — also envisages two JCI accredited hospitals at Mulund in Mumbai and another at Banneghatta Road in Bangalore — will result in an addition of 1,902 beds, it will also take the aggregate bed capacity of Fortis Network to 5,180 beds spread over 38 hospitals post this acquisition, said the company in a statement.

Meanwhile, Wockhardt Hospitals made it clear —notwithstanding the current divestment — that it is not exiting from hospitals business.  It still retains 10 hospitals including 7 super speciality hospitals and plans to add 5 more.

Briefing reporters here, Fortis Managing Director Shivinder M Singh said:  “…..the coming together of three leading brands: Fortis, Escorts and now Wockhardt, will provide the needed impetuous of taking healthcare delivery in India to the next level.” 

The combined network Singh said is expected to benefit from the economies of scale specifically in the areas of purchase and supply management, brand marketing, training & development and implementation of projects.  “This shall further enhance the clinical and service quality through cross learning between the two hospital groups.” Singh said the acquisition will be funded through a mix of debt and equity, besides internal accruals.  He pointed out that Fortis had approved a rights issue earlier this month Rs 997 crore. 

The acquisition is expected to provide operating synergies and unleash new opportunities for growth, apart from enhancing pan India footprint of Fortis. 

Prior to this deal, the largest healthcare acquisition by Fortis was that of Escorts Heart Institute in the year 2005.  Apart from two Greenfield projects under construction, the 8 other hospitals of Wockhardt Group acquired as on-going outfits are located in Mumbai, Kolkata and Bangalore.

Biggest player

Industry observers suggest this acquisition is taking Fortis a bit closer to the country’s biggest healthcare player, Apollo Hospitals Group, which is currently ahead of Fortis with about 7500 beds across 43 hospitals. Recently, Fortis reportedly wrested management control from Apollo to run three hospitals in Kota, Bangalore and Delhi.  In all the 3 cases, it is reported, the owners of the hospitals chose to embrace the Fortis brand after the end of their management contracts with Apollo. 

Meanwhile, Wockhardt Hospitals which is in the midst of restructuring its businesses and units and selling those it considers non-core to its operations, as it seeks to raise funds to settle some of its debt.  It has been trying to raise money through an equity sale since its initial public offer was withdrawn last year on poor investor response.

Wockhardt Chairman Habil Khorakiwala, who was also present in the press conference with Fortis management, commenting on divestment said: “This has been a fair agreement through which, we believe Fortis will continue to deliver quality care and patient safety.” 

Khorakiwala said, of the divestment proceeds, it would deploy Rs 500 crore for repayment of debt and the remaining for its expansion, especially two hospitals in Uttar Pradesh and Bihar.