In a surprise turn of events, Fortis today backed out of the race for Parkway Holdings. Fortis will divest its entire holding in Parkway at S$3.95 per share to Malaysian sovereign fund Khazanah. Fortis said it accepted the offer and would use the S$116.7 million profit on its Parkway stake to look for other opportunities in the region.
Khazanah and Fortis, which both own around a 25% stake in Parkway each, had wrangled for more than two months over the Singapore firm that both were eyeing to spearhead their regional expansion in the region's booming healthcare market। Parkway runs hospitals in Singapore, Malaysia, India and China.
In an interview with CNBC-TV18, Malvinder Singh, Chairman, Fortis Healthcare explained the rationale behind the exit.
Below is a verbatim transcript. Also watch the accompanying video.
Q: Let me start by asking you about your decision to walk away from the bidding war. This would have given you a combined market cap between Fortis and Parkway of about USD 5 billion. It made you the largest player in thehealthcare space in Asia and it opened up the avenues for you to expand your global footprint significantly. Why then the decision to let go at this stage?
A: It does all of that. I think Parkway is a great asset for us to use as a vehicle for achieving our strong leadership position across Asia. But at the same point in time we were very clear, we were not interested to get into a bidding war. At the same point in time we made a very good and a very compelling offer to all the shareholders through our open offer at S$3.8 a share which I personally believe is a little more stretched than what should be that optimal or that maximum value that we should be looking at Parkway.
So for us at Fortis S$3.8 was somewhat of a stretch. And therefore there is a point where you will reach where you believe that look this is a point at which I am a buyer. At S$3.8 we were a buyer for the entire company but at S$3.95 we are not a buyer, but somebody else is still a buyer and we were very comfortable between Fortis and Khazanah to come to a mutual agreement. They chose to do an open offer at the higher price and we agreed that we would tender our shares as a part of that open offer.
So we need to make sure at Fortis that we are taking the right decision. We are looking at all the opportunities out there which are in the market and at that value and at a relative benchmark of where we can make maximum returns and maximum value and achieve our strategic vision.
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