Healthcare major Fortis will demerge its diagnostics business from its hospital operations, the company announced on Friday.
Bhavdeep Singh, CEO of Fortis Healthcare, announced that its diagnostics business, which includes its popular subsidiary SRL Ltd, will be demerged from the listed entity Fortis Healthcare Ltd (FHL) and merged with another majority-owned subsidiary Fortis Malar Hospitals (FMH).
Similarly, Fortis Healthcare will buy out for ₹43 crore the hospital business under Fortis Malar, which operates a hospital in Chennai.
Now, the company’s hospital business will be consolidated under Fortis Healthcare, and the diagnostics businesses will move under Fortis Malar.
Explaining the rationale, the Fortis statement said, “The hospitals and the diagnostic businesses have distinct operating models and given the macro-fundamentals of the healthcare industry, each of these provide a strong growth opportunity in the foreseeable future.”
The company also said that the restructuring would lead to a simpler organisational structure that would be helpful for shareholders and investors.
“The appointed date for the slump sale, demerger and merger under the composite scheme is opening of business on January 1, 2017,” the company said in a statement to the Bombay Stock Exchange.
“We believe this will unlock immense value for all the shareholders.
“As a result of the new synergistic groupings, both the hospital and diagnostic businesses will benefit from greater clarity, a stronger focus and an independent growth trajectory,” said Malvinder Singh, Executive Chairman, Fortis Healthcare.
On completion of the demerger, Fortis Malar would issue and allot to equity shareholders of Fortis Healthcare 0.98 fully paid-up equity shares of ₹10 each for every one equity share of ₹10 each held by them in Fortis Healthcare, the company added.
Further, the equity shareholders of SRL will be issued and allotted 10.8 equity shares of ₹10 each of Fortis Malar for every 1 equity share of ₹10 held by them in SRL.
Fortis Healthcare’s shares closed down 3.27 per cent at ₹187.80 a piece on Friday.