Fortis Healthcare to divest Fortis Malar Hospital in Chennai to MGM Healthcare
The transaction will be an all-cash deal and is estimated to be consummated by end of January 2024.
NEW DELHI: Fortis Healthcare Limited has announced signing of definitive agreements by its certain subsidiaries for sale of the business operations along with the land and building assets pertaining to Fortis Malar Hospital in Chennai to MGM Healthcare Private Limited, a prominent healthcare delivery service provider, for a sale consideration of Rs 128 crore.
The transaction will be an all-cash deal and is estimated to be consummated by end of January 2024.
The aforesaid divestment is a part of Fortis’ ongoing portfolio rationalization strategy in order to focus on deepening its presence in select geographic clusters where it has a sizeable presence. It follows from the divestment of Fortis Healthcare’s business operations in its Vadapalani facility in Chennai in July 2023.
The Fortis Malar Hospital is an 140-bed facility and 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 and have constrained further investments into the facility. The matter has accentuated the need to divest the Fortis Malar Hospital as a viable and prudent option for all stakeholders.
The proposed acquisition is in line with MGM Healthcare’s strategy to further expand its presence in Chennai, in addition to its two quaternary care hospitals with a combined bed capacity of approx. 600 beds at present and another 450 bed greenfield hospital under development.
Dr. Ashutosh Raghuvanshi, Managing Director & CEO, Fortis Healthcare Limited, said: “The proposed divestment of the Fortis Malar facility underpins our focus on optimizing the current portfolio of our hospital assets with a view to prioritize our growth and expansion in other key markets and re-allocate capital judiciously. This is our second under performing asset divestment in the last 2 quarters and emphasizes our resolve to improve our overall profitability and margins in the hospital segment.”
Dr. Prashanth Rajagopalan, Managing Director, MGM Healthcare Private Limited, said: “Chennai has a deep emotional connection with Malar Hospital. We are determined to restore and advance Malar to its original glory. 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."