Fortis Healthcare Divests Malar Hospital To MGM Healthcare For Rs 128 Cr
Fortis Healthcare, a healthcare provider on Friday informed the signing of definitive agreements by its certain subsidiaries for the sale of the business operations along with the land and building assets pertaining to Fortis Malar Hospital situated at Gandhi Nagar, Adyar Chennai to MGM Healthcare for a sale consideration of Rs 128 crores, the company said in a statement.
The Fortis Malar Hospital is approximately a 140-bed facility and has been facing certain legacy issues, the company’s statement read. It added that over the past few years, with continuous efforts, several of these issues have been resolved.
However, some of the legacy aspects continue to persist which has given rise to certain challenges and has constrained further investments into the facility. The matter has accentuated the need to divest the Fortis Malar Hospital as a viable and prudent option for all stakeholders, it stated in the statement.
The transaction comprises the divestment of the business operations pertaining to Fortis Malar Hospital residing in the listed subsidiary of the company- Fortis Malar Hospitals Limited in which Fortis Healthcare owns a 62.7 per cent equity stake; the OPD and radiology business operations related to the Fortis Malar Hospital and the land parcel adjacent thereto.
The transaction will be an all-cash deal and is estimated to be consummated by the end of January 2024, the statement added.
The divestment is a part of Fortis’ ongoing portfolio rationalisation strategy in order to focus on deepening its presence in select geographic clusters where it has a sizeable presence. It follows the divestment of Fortis Healthcare’s business operations in its Vadapalani facility in Chennai in July 2023.
Dr Ashutosh Raghuvanshi, Managing Director and CEO, Fortis Healthcare said, “The proposed divestment of the Fortis Malar facility underpins our focus on optimizing the current portfolio of our hospital assets with a view to prioritise our growth and expansion in other key markets and re-allocate capital judiciously."
Raghuvanshi mentioned that this is the second underperforming asset divestment in the last two quarters and the resolve is to improve overall profitability and margins in the hospital segment.
The proposed acquisition is in line with MGM Healthcare’s strategy to further expand its presence in Chennai, in addition to its two quaternary care hospitals with a combined bed capacity of approx. 600 beds at present and another 450-bed greenfield hospital under development.
Dr Prashanth Rajagopalan, Managing Director, MGM Healthcare commented, “Chennai has a deep emotional connection with Malar Hospital. We are determined to restore and advance Malar to its original glory. As a part of our long-term growth and expansion plans, MGM Healthcare has been investing in both greenfield and existing facilities to enhance care and clinical offerings for a broader patient population. This is a testament to our commitment to expanding our reach and enhancing the wellbeing of the communities we proudly serve."
Rajagopalan asserted, "Acquisition of Fortis Malar by MGM is a crucial step in our planned capacity expansion nationwide, allowing us to extend our commitment to providing the best in quality, affordable and personalised healthcare. With this acquisition, we would bring our total bed count in Chennai to approximately 800 beds."
