Saturday May 29, 2010
By RISEN JAYASEELAN
risen@thestar.com.my
PETALING JAYA: Khazanah Nasional Bhd’s move to control Singapore-listed Parkway Holdings is to ensure it is in the driving seat of the management of the latter, which has since been taken over by an Indian firm, Fortis Healthcare, sources say.
“Khazanah, which has been a contented minority shareholder in Parkway together with US private equity firm TPG since 2008, is, however, concerned about governance issues under the new management. Hence, in order to protect its interest in Parkway which Khazanah sees as a very valuable asset, it has launched the partial general offer,” said a banker familiar with the situation.
The problems have stemmed from TPG’s decision to sell its 23.9% stake in Parkway to Fortis in March. Fortis had since upped its stake in Parkway to 25.3%, making it the single largest shareholder of Parkway, after Khazanah’s 23.3%.
It is still unclear how come Khazanah did not seek to buy TPG’s stake then. TPG had sold out at a price of S$3.56 (RM8.40) per Parkway share. Khazanah’s partial offer to increase its stake in Parkway to 51.5% is at a price of S$3.78 (RM8.90) per share, 6% higher.
But an insider added that Khazanah did not have a chance to buy that stake from TPG or had much say in the choice of buyer (namely Fortis) as the deal was concluded “fairly quickly.”
Khazanah would also have been constrained from buying TPG’s stake in Parkway as that would have triggered a full general offer (GO) for the remaining shares in Parkway, in a deal that could have potentially cost Khazanah more than S$3bil (RM7bil) to gain control of Parkway. The partial offer (if successful) will only cost Khazanah S$1.18bil (RM2.8bil).
Since coming into Parkway, Fortis has had four representatives on the 12-member Parkway board.
One of Fortis’ founders, Malvinder Mohan Singh, has also become the chairman of Parkway. Fortis Healthcare is owned by brothers Malvinder and Shivinder Singh.
They had previously been shareholders of India’s Ranbaxy Laboratories but sold out in 2008 to Japan’s Daiichi-Sankyo for US$4.6bil.
However, soon after the sale, Ranbaxy recorded losses and, following a two-year-old investigation, the US Food & Drug Administration banned 30 drugs made at two Ranbaxy company plants for fabricating test results, it had been reported.
Daiichi Sankyo has also severely written down its investment in Ranbaxy.
It has been reported that Fortis planned to use Parkway as its vehicle to realise its dream of building a leading global healthcare chain. Malvinder had even decided to relocate to Singapore to oversee its global plans, reports have indicated.
If the partial offer is accepted, Khazanah will have effective control over Parkway. It might then decide to change the board to limit the influence Fortis had over Parkway, sources said.
Another possible outcome is for Fortis to launch a counter bid, which may escalate into a bidding war for control.
However, Fortis may only carry out a full general offer as Singapore takeover rules do no allow a party that has bought shares in the target company in the last six months to launch a partial offer.
Whatever the case, Khazanah’s interest in Parkway should come as no surprise. Firstly, healthcare is a strategic business for Khazanah, which already has majority stakes in Pantai Medical group as well as a 67.5% stake in private medical college International Medical University.
Khazanah had also bought into Apollo Hospitals in India in 2007, which is India’s largest private hospital group.
Parkway in turn controls eight private hospitals, totalling 2,141 beds in Singapore, Malaysia, Brunei and India. It also has joint ventures with Apollo.
Parkway’s hospitals in Singapore include Mount Elizabeth, Gleneagles, Parkway East and Novena, the latest premier hospital service which will be completed in 2012.
http://biz.thestar.com.my/news/story.asp?file=/2010/5/29/business/6364035&sec=business
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