Institutional EYE

Commentary on Corporate Governance Issues

How should Fortis confront its Revlon moment?

April 19, 2018

 

Fortis Healthcare’s investors may be forgiven for wondering why everyone in the room is sitting scared. There are four competing bidders sitting across the table, yet all of them are holding back. Nor is the board pushing them hard. For investors the solution lies in pressurizing the board to be bold and redraw the sale process.

 

The unexpected and unprecedented fourth bid by Fosun International Limited and the revised offer from the Munjal-Burman combine for Fortis Healthcare, is clear proof that there is value in the assets. The board needs to rework how it approaches the various bidders and for it to open up the bidding process. This is not without its risks, but Fortis’ board needs to ensure that shareholders realize the full potential of their investments.

 

With four offers on the table the company has entered what may well be described as its ‘Revlon moment.’ And while Indian regulations do not say so, Fortis’ board in these given circumstances may have no choice but to apply the ‘Revlon rule’ and maximize the value for its shareholders.

 

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