Fortis Healthcare Limited, a healthcare service provider, has finalised negotiations to sell Fortis Malar Hospital in Chennai to MGM Healthcare Private Limited. The agreed-upon sale price is around 128 crore.
“The agreement is for a sale consideration of approx. INR 1,28,00,25,000 (Rupees One hundred and twenty eight crores and twenty five thousand) (subject to customary closing adjustments as agreed in definitive agreements),” Fortis Healthcare said in an exchange filing.
The agreement calls for the sale of Fortis Malar Hospital’s business operations, as well as related land and building assets in Gandhi Nagar, Adyar, Chennai. This all-cash transaction is expected to close in January 2024, subject to the precise conditions precedent and closing requirements contained in the definitive agreements.
According to the joint statement, the successful execution of the acquisition is also contingent on securing shareholder approvals from both Fortis Healthcare and Fortis Malar Hospitals Limited.
It went on to say that the disposal is part of Fortis’ ongoing portfolio rationalisation strategy, which aims to focus on improving its position in key geographic clusters where it has a significant presence.
“The proposed divestment of the Fortis Malar facility underpins our focus on optimizing the current portfolio of our hospital assets with a view to prioritize our growth and expansion in other key markets and re-allocate capital judiciously,” said Dr. Ashutosh Raghuvanshi, Managing Director & CEO, Fortis Healthcare Limited in a statement
“This is our second under performing asset divestment in the last 2 quarters and emphasizes our resolve to improve our overall profitability and margins in the hospital segment,” he added.
The transaction involves the sale of Fortis Malar Hospital’s commercial operations, which are housed within the listed company Fortis Malar Hospitals Limited. This subsidiary is 62.7 percent owned by Fortis Healthcare. The divestiture includes the outpatient department (OPD) and radiology business operations associated with Fortis Malar Hospital, as well as the land and building on which the hospital is located. In addition, the sale includes other nearby land parcels related to the property.
MGM Healthcare Private Limited is a fast rising South Indian quaternary care provider that provides advanced healthcare services. Currently, the organisation runs two quaternary care hospitals with a total bed capacity of 600. Furthermore, a new greenfield hospital is being built in the Tamil Nadu area of Pondicherry.