Top India Court Orders Forensic Audit of Fortis Share Sale




  • In Business
  • 2022-09-22 17:19:04Z
  • By Bloomberg
 

(Bloomberg) -- India's Supreme Court ordered a forensic audit of the share sale in Fortis Healthcare Ltd. in 2018 and refused to allow the open offer from Malaysia's IHH Healthcare Bhd to proceed, triggering a rout in Fortis's stock.

Most Read from Bloomberg

  • Ukraine Seizes Dozens of Russian Tanks Left by Fleeing Forces

  • Putin Calls Up More Troops, Resumes Nuclear Threat Over Ukraine

  • Powell Signals More Pain to Come With Fed Sending Rates Higher

  • A Great Copper Squeeze Is Coming for the Global Economy

  • South Korea President Caught on Hot Mic Insulting US Congress

A ruling by three judge-panel, headed by Chief Justice U.U. Lalit on Thursday sought a probe into sale of shares in Fortis by lenders and transfer of money to RHT Health Trust on a petition filed by Daiichi Sankyo Co. The Japanese drug maker had acquired a pharmaceutical firm in 2008 from Malvinder Singh and Shivinder Singh, who are also ex-owners of Fortis Healthcare.

A lower court can decide on whether the open offer for Fortis can be allowed based on the evidence it gets, the judges said. "Everything goes back to the executing court," Justice Lalit said. A detailed copy of the ruling is awaited.

The court on Thursday also sentenced the Singh brothers to six months in jail on charges of contempt of court. Daiichi is seeking execution of $500 million award in Delhi High Court against the Singh brothers, who are already in jail on separate fraud and money laundering charges.

Fortis' shares plunged as much as 20% immediately after the ruling on Thursday, the most since February 2018, in Mumbai. The company's shares partially recovered to end 14.7% lower for the day.

The verdict further delays the takeover of the embattled Indian hospital chain company by Malaysia's IHH that has already been pending for over three years. IHH acquired about a third of Fortis in 2018 to became its largest shareholder. The open offer for 26% more shares could have helped IHH fortify position in the company. After the first leg of the deal in August 2018, Fortis has embarked on a revamp with a cost cutting campaign implemented by Chief Executive Officer Ashutosh Raghuvanshi.

Cross Fire

The IHH-Fortis deal is stuck in the cross fire between Daiichi and Singh brothers who used to own Fortis. Daiichi had in 2016 won an arbitration award worth over $500 million against the Singhs in the dispute around the sale of brothers' generic drug making firm, Ranbaxy Laboratories Ltd., to Daiichi.

In 2018, when Indian lenders sold Singh brothers' pledged shares in Fortis, the Japanese drug maker objected and said the brothers had on oath assured their stake in Fortis will cover the award amount.

Fortis and the India's capital market regulator had petitioned the court to lift the halt, arguing Daiichi's recovery efforts are not affected by the open offer.

All the funds from IHH went to help Fortis recover from financial difficulties and no funds went to the Singh brothers, IHH's spokesman said in an emailed statement. "Whatever shares that were owned by Singh brothers that were pledged to the banks are for the banks to explain to the court and not for IHH," the company added.

The court on Thursday said all cases, including insolvency petitions against companies owned by Singh brothers, will be allowed to proceed.

(adds comment from IHH, updates with share price movement. An earlier version had a factual error.)

Most Read from Bloomberg Businessweek

  • The Sneaky Genius of Apple's AirPods Empire

  • Private Equity Giants Are Having Cash Flow Problems

  • The SPAC King Folds, Ending the Blank-Check Frenzy

  • The $8.6 Billion Startup That Helps Governments Trace Crypto

  • Wall Street's Bosses Reassert Themselves With the Return of Annual Culls

©2022 Bloomberg L.P.

COMMENTS

More Related News

Asian Stocks Gain After US Rallies, Yields Slide: Markets Wrap
Asian Stocks Gain After US Rallies, Yields Slide: Markets Wrap

(Bloomberg) -- Asian stocks gained in early trading following a rally in US shares and a surge in Treasuries as weak manufacturing data tamped down fears of ...

Brazil
Brazil's Lula Seeks to Pivot Campaign to Northeast Ahead of Runoff Vote

(Bloomberg) -- Luiz Inacio Lula da Silva huddled in Sao Paulo with his top advisers as the leftist former Brazilian president sought to pivot his campaign to...

Warren Buffett
Warren Buffett's Successor Is Building an $68 Million Berkshire Holding

(Bloomberg) -- Greg Abel, who is in line to eventually succeed Warren Buffett as chief executive officer of Berkshire Hathaway Inc., has been building his...

Credit Suisse
Credit Suisse's Options Worsen as Markets Mayhem Takes a Toll

(Bloomberg) -- Dixit Joshi won't forget his first day as Credit Suisse Group AG's chief financial officer in a hurry. And yet the experience won't have been ...

Samsung Woos US Chip Buyers With Tech Advances, Texas Production
Samsung Woos US Chip Buyers With Tech Advances, Texas Production

(Bloomberg) -- Samsung Electronics Co. announced an aggressive five-year plan to lure US chip buyers with more advanced technology, aiming to produce...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • Orchard Homes
    (2022-09-23 12:56:55Z)

    Good post ! The expense plan is really sensible and accommodating for everyone. Both Confidential plots and Business plots are available in full total and routinely booked installments. The endeavor offers spacious plot cuts estimated between 5 Marla and 1 Kanal. You ought to store a 30% introductory venture and they can benefit of the routinely booked installments decision. The movement course of occasions ensures finish in 4 years The portion plan is the going with.

    REPLY

Top News: Business