- Joined
- Aug 7, 2008
- Messages
- 1,125
- Points
- 38
http://www.businesstimes.com.sg/sub/companies/story/0,4574,391286,00.html?
Singapore Companies
Published June 21, 2010
Parkway tussle reflects clash of corporate cultures
Fortis's aggressive corporate style contrasts with more conservative M'sians
By S JAYASANKARAN
IN KUALA LUMPUR
THE soured relations between India's Fortis Healthcare and Malaysian sovereign wealth fund Khazanah Nasional can be traced back to the dominant nature of the Singh brothers who control the Indian group, Malaysian healthcare executives said.
Malvinder Mohan Singh and his brother Shivinder - who are estimated to be worth US$3 billion - are known to shake up the management of companies that they control.
Even so, the executives said that when Fortis bought a 23.9 per cent interest in Singapore-based healthcare provider Parkway Holdings in March, and then upped its stake in the firm to 25.2 per cent, Khazanah - which holds a 24 per cent interest in Parkway - thought it could work with the Indian firm on the basis of 'reciprocity.'
That was not to be. Very quickly, the Singh brothers took control of Parkway's board despite having only one per cent more than Khazanah in the Singapore-listed firm. Almost immediately, they had four directors - including the two brothers - on Parkway's board to Khazanah's two, the executives said.
The brothers were also said to have made so-called 'concert party arrangements' with three other directors, the executives said. 'In effect, they control seven out of the thirteen directors on Parkway's board,' one of the executives said. 'That ties Khazanah's hands and that's why it wants control now,' one of the executives told BT.
On June 10, the Malaysian investment agency formally made an offer to shareholders to acquire 313 million Parkway shares at S$3.78 a share. If its bid is successful, it will cost Khazanah S$1.8 billion and will boost its shareholding in Parkway to 51.1 per cent from 24 per cent.
Fortis has made no formal bid but speculation that it would drove Parkway's shares above Khazanah's offer price at one point although prices have since returned to more modest levels. The only indication of Fortis's intent so far has been a Bloomberg report that the Indian-based group was 'keeping its options open' with regard to Parkway. Other reports indicated it was looking for funding.
The potentially hostile bidding war epitomises a clash of cultures between an aggressive corporate predator and the more conservative Malaysian investment agency which rarely interferes in the management of firms it controls.
Indeed, the Malaysian operations of Parkway - the privately held Pantai Medical Group - are managed by Parkway although Khazanah holds a majority interest (60 per cent) in Pantai.
On June 16, the Singapore market regulator stepped into the fray, giving the Indian firm until July 30 to make a counter bid. In effect, the regulator was telling Fortis to speak up or forever hold its peace.
The ultimatum suits Khazanah fine, as it leaves it wriggle room to make a counter offer, the executives said. Technically, Khazanah's offer closes on July 8 but it can extend it for 60 days (August 10) which means it has enough time to make a counter offer should Fortis make a move by July 30.
Finally, there is Khazanah's trump card which the executives say Kuala Lumpur may play if Khazanah loses out. This revolves around the fate of two lucrative Malaysian government health concessions owned and managed by Pantai. Pantai contributes almost a third of Parkway's earnings before interest, taxes and depreciation.
The executives said that the two concessions which expire in 2011 and 2012 are unlikely to be renewed under Pantai if Khazanah loses out to Fortis. Khazanah is the investment arm of the federal government of Malaysia so it is highly unlikely that Kuala Lumpur will allow the concessions to fall into foreign hands.
Morgan Stanley, the independent adviser appointed by Parkway to counsel shareholders on the Khazanah offer was sufficiently troubled by the prospect to ask Parkway for more information on the two concessions, the executives said. Much will depend on its final report which is due to be presented to Parkway's board soon.
Singapore Companies
Published June 21, 2010
Parkway tussle reflects clash of corporate cultures
Fortis's aggressive corporate style contrasts with more conservative M'sians
By S JAYASANKARAN
IN KUALA LUMPUR
THE soured relations between India's Fortis Healthcare and Malaysian sovereign wealth fund Khazanah Nasional can be traced back to the dominant nature of the Singh brothers who control the Indian group, Malaysian healthcare executives said.
Malvinder Mohan Singh and his brother Shivinder - who are estimated to be worth US$3 billion - are known to shake up the management of companies that they control.
Even so, the executives said that when Fortis bought a 23.9 per cent interest in Singapore-based healthcare provider Parkway Holdings in March, and then upped its stake in the firm to 25.2 per cent, Khazanah - which holds a 24 per cent interest in Parkway - thought it could work with the Indian firm on the basis of 'reciprocity.'
That was not to be. Very quickly, the Singh brothers took control of Parkway's board despite having only one per cent more than Khazanah in the Singapore-listed firm. Almost immediately, they had four directors - including the two brothers - on Parkway's board to Khazanah's two, the executives said.
The brothers were also said to have made so-called 'concert party arrangements' with three other directors, the executives said. 'In effect, they control seven out of the thirteen directors on Parkway's board,' one of the executives said. 'That ties Khazanah's hands and that's why it wants control now,' one of the executives told BT.
On June 10, the Malaysian investment agency formally made an offer to shareholders to acquire 313 million Parkway shares at S$3.78 a share. If its bid is successful, it will cost Khazanah S$1.8 billion and will boost its shareholding in Parkway to 51.1 per cent from 24 per cent.
Fortis has made no formal bid but speculation that it would drove Parkway's shares above Khazanah's offer price at one point although prices have since returned to more modest levels. The only indication of Fortis's intent so far has been a Bloomberg report that the Indian-based group was 'keeping its options open' with regard to Parkway. Other reports indicated it was looking for funding.
The potentially hostile bidding war epitomises a clash of cultures between an aggressive corporate predator and the more conservative Malaysian investment agency which rarely interferes in the management of firms it controls.
Indeed, the Malaysian operations of Parkway - the privately held Pantai Medical Group - are managed by Parkway although Khazanah holds a majority interest (60 per cent) in Pantai.
On June 16, the Singapore market regulator stepped into the fray, giving the Indian firm until July 30 to make a counter bid. In effect, the regulator was telling Fortis to speak up or forever hold its peace.
The ultimatum suits Khazanah fine, as it leaves it wriggle room to make a counter offer, the executives said. Technically, Khazanah's offer closes on July 8 but it can extend it for 60 days (August 10) which means it has enough time to make a counter offer should Fortis make a move by July 30.
Finally, there is Khazanah's trump card which the executives say Kuala Lumpur may play if Khazanah loses out. This revolves around the fate of two lucrative Malaysian government health concessions owned and managed by Pantai. Pantai contributes almost a third of Parkway's earnings before interest, taxes and depreciation.
The executives said that the two concessions which expire in 2011 and 2012 are unlikely to be renewed under Pantai if Khazanah loses out to Fortis. Khazanah is the investment arm of the federal government of Malaysia so it is highly unlikely that Kuala Lumpur will allow the concessions to fall into foreign hands.
Morgan Stanley, the independent adviser appointed by Parkway to counsel shareholders on the Khazanah offer was sufficiently troubled by the prospect to ask Parkway for more information on the two concessions, the executives said. Much will depend on its final report which is due to be presented to Parkway's board soon.
