Fortis Malar Hospitals Ltd on Friday said it will sell Malar Hospital at Gandhi Nagar in Chennai for Rs 45.5 crore to MGM Healthcare Pvt Ltd.
The company has signed a definitive agreement for the sale of its business operations pertaining to Malar Hospital at Gandhi Nagar, Adyar, Chennai, to MGM Healthcare (MGM), a prominent healthcare delivery service provider, Fortis Malar Hospitals Ltd said in a regulatory filing.
The sale consideration is about Rs 45.5 crore, it added.
Adjunct to this transaction, the OPD and radio diagnostics business operations related to the Malar Hospital, including the land and building, and the adjacent land parcels, are also being divested by two wholly owned subsidiaries of Fortis Healthcare Ltd -- Fortis Health Management Ltd, and Hospitalia Eastern Pvt Ltd -- to MGM, it added.
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Fortis Healthcare owns a 62.7 per equity stake in Fortis Malar Hospitals.
The transaction will be an all-cash deal and is expected to be consummated by the end of January, subject to certain conditions, including the approvals from shareholders of both the company and Fortis Healthcare, the filing added.
On the reasons for the sales of the Malar Hospital, that has around 140 beds, the company said it has been facing certain legacy issues.
"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 have given rise to certain challenges for the company and constrained further investments into the facility," it said.
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The matter has accentuated the need for the company to divest its business as a viable and prudent option for its stakeholders, Fortis Malar Hospitals added.
"After a number of deliberations amongst the management and the board, the proposed divestment of business operations of the Malar Hospital seems to be a practical solution in the interest of all stakeholders," Fortis Malar Hospitals Non-Executive Chairman Daljit Singh said.
For MGM, the proposed acquisition is in line with its strategy to further expand its presence in Chennai, in addition to its two quaternary care hospitals with a combined bed capacity of about 600 beds at present and another 450-bed greenfield hospital under development.
"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," MGM Healthcare Managing Director Prashanth Rajagopalan said.
He further said the acquisition 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," Rajagopalan added.
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