The Securities and Exchange Board of India (Sebi) is likely to inform Malaysia’s IHH Healthcare Berhad that it should proceed with its open offer for Fortis Healthcare only after obtaining appropriate directions from the Delhi High Court, which is seized of the matter. Sources aware of the development told FE that the market regulator has been advised on these lines by a senior lawyer.
Sebi is likely to move the Delhi high court seeking a direction from the court with regards to the open offer.
“Sebi under its Substantial Acquisition of Shares and Takeovers Regulations clearly has the power to direct that the open offer be proceeded with by IHH. However, in view of the communications received by Sebi (from IHH, FHL and Daiichi Sankyo) it is very likely that in the event Sebi directs that the open offer be proceeded with, contempt proceedings would be adopted by parties before the Delhi high court,” the legal opinion said.
The legal advice tendered to Sebi is in tune with the Supreme Court’s September 22 order which did not categorically lift the stay order on the open offer which was earlier ordered by the HC.
The opinion, as seen by FE, also states that the SC’s judgment is silent on Sebi’s application that had sought directions to Northern TK Venture along with IHH Healthcare Berhad and Parkway Pantai to proceed with the open offer to acquire shares of Fortis Healthcare.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
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IHH managing director and CEO Kelvin Loh, had told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, Japanese pharma major Daiichi Sankyo has termed IHH’s proposed acquisition of 26% shares of FHL as “illegal,” “an abuse of process of law” and also “gross overreach” of the pending proceedings before the HC and also in violation of the SC orders. It has written to Sebi for a personal hearing to explain the illegalities.
Daiichi is also filing a plea before the HC seeking appointment of forensic auditors to analyse transactions involving IHH, FHL and RHT, Singapore, as directed by the HC on October 18. Daiichi is pursuing the enforcement of `3,500 crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had, in 2018, put on hold the sale of Fortis Healthcare to IHH, on a contempt plea filed by the Japanese drug maker against the Singh brothers.
