Manipal acquires majority stake in AMRI Hospitals for Rs 2,300 cr
India’s second-largest hospital chain Manipal Hospitals has acquired a majority stake — 84 per cent — in Kolkata-based AMRI Hospitals, which is part of Emami Group, for an undisclosed amount in a bid to strengthen its presence in the country’s eastern region. The region witnesses an influx of patients from a few neighbouring countries, too.
The deal size, according to market sources, is estimated at around Rs 2,300 crore. The agreement took months of negotiations and legal battles.
Manipal Hospitals, which now has 9,500 beds with the addition of 1,200 beds from AMRI, is looking to expand to 12,000 beds in three years through both organic and inorganic routes.
Manipal Group, which has a significant stake in Manipal Hospitals, said that the deal fits into its growth strategy to have a wider footprint and expanded presence across eastern India, and finally emerge as the largest hospital chain in that region. Emami Group, on the other hand, said it decided to divest its majority stake in AMRI Hospitals to focus on its core business, including FMCG.
Dr Ranjan Pai, chairman, Manipal Education and Medical Group (MEMG), said: “Manipal Hospitals always had patrons from eastern India and countries like Bangladesh. This acquisition is in sync with our objective to further strengthen our presence and serve the patients in eastern India — an underserved area when it comes to health care.”
Dilip Jose, MD and CEO of Manipal Hospitals, told Business Standard that now that it would now have four hospitals in Kolkata and that the hospital chain would look to expand further to tier-2 cities and towns of West Bengal. “We are already setting up three hospitals with a cumulative of 750 beds in Bengaluru, and adding another 350 beds in Raipur,” Jose said.
Manipal Group plans to add more beds over the next 18-36 months through the inorganic route, taking its bed count to 12,000 beds across India.
Claiming that AMRI Hospitals has been very close to their heart, Emami Group directors Aditya Agarwal and Manish Goenka stated: “In an endeavour to focus on our core businesses, we have divested our majority stake in AMRI Hospitals, which is a significant step in Emami Group’s stated objective. We will, however, continue as an investor in AMRI Hospitals with a 15 per cent stake. The Government of West Bengal will also have around 1 stake in AMRI Hospitals.”
“We have never viewed it as a business entity but a way of giving back to society,” they further said.
Emami promoters are trying to reduce their share pledge in the FMCG company Emami Ltd from 33 per cent. In the first quarter earnings call, the company had indicated that the share pledge would come down to 18-20 per cent.
In April, Singapore-headquartered investment company Temasek acquired an additional 41 per cent in Manipal Health Enterprises (MHE), valuing MHE at Rs 40,000 crore. Sheares Healthcare Group, a wholly-owned subsidiary and independently managed portfolio company of Temasek, retained its existing 18 percent stake. Manipal Group now holds around 30 per cent of MHE, which was founded by Dr Ramdas Pai in 1991.
MHE closed FY23 at a consolidated revenue of around Rs 4600 crore and Ebitda (earnings before interest, taxes, depreciation, and amortisation) of Rs 1,200 crore, resulting in an Ebitda margin of over 25 per cent, market sources said. It had an average revenue per occupied bed of Rs 2 crore a year at a network level, which is at par with Fortis Healthcare and Apollo Hospital Enterprises, they said.
The AMRI-Manipal deal took a while due to legal trouble and negotiations. In February this year, MHE and Emami Group renewed their discussions after the former moved the Delhi High Court in November 2022, seeking to bar Emami Group from selling a majority stake in AMRI Hospitals to a third party or alter the management after a deal between the two parties fell through.
Owing to differences over the terms and conditions of the deal and pending clearances from the West Bengal government, the deal between Manipal Health and Emami did not fructify. Reportedly, Max Healthcare had entered the fray for AMRI Hospitals, offering a better bid than Manipal’s Rs 1,800-crore offer for AMRI. According to reports, Max’s counter offer was around Rs 2,700 crore. Max Healthcare had not confirmed the development.