Global healthcare deals: Beneath the apparent
Countless raging reviews, informed discussions, never-ending debates and serious write-ups have been exhausting themselves on the global deals that the healthcare sector has been witnessing in its entirety. Continuous efforts have been made to figure out a logical explanation that would define the rationale and the outcome of the deal. Does opting out of the deal denote an end or is it the indication of a beginning? Or is it the threshold paving the way to an interesting future?
Some of the deals were expected to reshape the geography in the healthcare scenario, thus reforming history. One of the major global deals in the healthcare sector that is being often talked about is the Fortis-Parkway deal. Initially, in the deal, Fortis had a share of 25.3 per cent, while Khazanah assumed a share of 23.8 per cent. However, after much consideration, the shares of the companies took the present dimension. Continuous retrospection was done to decipher this rationale.
Sapna Jhawar, Research Analyst, Sharekhan, elaborates, “One main reason that acted as the rationale behind the Fortis-Parkway deal was that Fortis wanted to balance its already stretched balance sheet. But when Khazanah started betting aggressively, the scenario changed. With this deal, Fortis got a know-how of the healthcare condition, ie, the hospital regulations pan-Asia. Thus, the backing out from the deal protected its balance sheet and the operating margin.”
Commenting on the outcome and discussing the agenda, Malvinder Mohan Singh, Chairman, Fortis Hospitals Ltd, says, “Less than a year after the Indian expansion and in the final month of the fiscal, Fortis announced its acquisition of a strategic stake in Parkway Holdings – Asia’s largest healthcare service provider. Our leadership team was clear on the rationale for this investment – to leverage Parkway’s extensive network of quality hospitals in order to establish a pan-Asian presence, and advance a step closer towards building a global healthcare business.” He further continues, “Subsequent events & pricing of the asset made us reconsider the acquisition, and in the long-term interest of our stakeholders, we eventually tendered our Parkway stake to a competing offer. This bid amply demonstrated our capability & strategic intent. And, we will continue to explore otherorganic & inorganic growth opportunities to the benefit of our stakeholders, in alignment with our vision.”
Staying with this particular deal, Sanjiv D Kaul, Managing Director, Chrys Capital, clarifies, “It was indeed a good deal. Fortis is the second largest healthcare system, and they were very ambitious with this project. They had thought that if this deal materialised, they would be able to achieve a pan-regional approach. In all deals, one wins and one loses. If this deal had worked, it would have been a true blend of talent.” Analysts have brainstormed over several sessions in order to arrive, if not at a successful, then at least a desired and contented end. He continues, “It is unfortunate that the deal did not work out for Fortis and they had to withdraw from it.”