The Ranbaxy group-promoted Fortis Healthcare appears to be in a tearing hurry to increase its footprint in the south. Fresh from acquiring the 180-bed Malar Hospital in Chennai, Fortis has now set its sight on the 450-bed Lifeline Hospital chain in Chennai. The Delhi-based healthcare major is believed to have made an offer to acquire the hospital chain promoted by Dr JS Rajkumar.
With a high appetite for gobbling up mid-size hospitals in the region, especially, in Tamil Nadu, Fortis is also believed to have reached the final stages of negotiations to acquire the 100-bed Get Well Hospital in Tirunelveli, Tamil Nadu.
While industry sources say the closely-held Lifeline is firming up a plan that may see the promoters’ stake getting diluted by 26%, a senior management official of the hospital merely said that Fortis has been engaged in discussions with the hospital to forge a strategic alliance that is aimed at running a chain of hospitals in south.
“Lifeline is still working with Fortis on creating Asia’s largest healthcare alliance but the exact details are yet to be worked out,†the official told ET on Monday.
The Lifeline Hospital chain now has 450 beds and 30-plus corporate clinics. It has 1,000 employees on its rolls. With a turnover of less than Rs 20 crore in March 2007, Lifeline’s enterprise value is pegged between Rs 200 and Rs 300 crore. It is eyeing a turnover of more than Rs 40 crore this year.
With about 2.5 lakh sq ft space available across its four hospitals in the city, the hospital chain, which started as a 20-bed venture with 25-people in 1997, has been rapidly pursuing expansion plans.
It has a major 225-bed facility at Perungudi in the city’s IT corridor. Recently, it entered into a 10-year lease agreement with the Bharathirajaa Speciality Hospital and Research Centre, located at T Nagar, a major commercial hub. This pact will scale up the bed strength of Lifeline by 40 more.
“It is the combination of real estate and brand value that has turned Lifeline into a ‘hot’ acquisition target. These two are significant positive factors that have drawn the attention of healthcare biggies,†industry sources explained.
Some also suggest that Lifeline is facing acute cash flow problems in recent times making Fortis’ offer lucrative. However, the hospital official said it has not defaulted to any bank, adding “we will be declaring profits this year.â€Â
Fortis made its southern foray in September with the acquisition of the multi-speciality Malar Hospital, which was a takeover target for over a year. The enterprise value of the deal was Rs 57 crore.
It subsequently announced a Rs 25-crore plan for Malar’s facelift. Malar, too, sits on property in a prime location. The takeover process is now being completed with open offers made to the public.
Soon after the deal, Fortis Healthcare strategy and organisational development president Daljit Singh had said that the group was keen on enhancing its geographic presence in the south, adding that it was eyeing hospitals in both the metro and tier II cities to deepen its presence. Source: economictimes
