Malaysia's IHH Healthcare seeks $1.3 billion compensation from Daiichi Sankyo over Fortis acquisition dispute

MUMBAI: Malaysian healthcare giant IHH Healthcare , backed by Japanese firm Mitsui as its primary stakeholder, has escalated its legal battle against Daiichi Sankyo , demanding $1.3 billion in compensation regarding its Fortis Healthcare acquisition. This claim, submitted to the Tokyo District Court , represents a tenfold increase from the initial $138 million sought. IHH contends that Japan’s Daiichi Sankyo hindered its attempts to complete open offers for acquiring 26% stakes in both Fortis and its subsidiary Fortis Malar Hospitals.

The original petition against Daiichi Sankyo was lodged in October 2023, seeking $138 million plus 3% annual interest. The revised claim stems from an assessment by independent consultancy Osborne Partners, hired by IHH, which calculated damages at $1.3 billion based on various scenarios assuming successful completion of the open offers. This updated figure excludes interest charges.

The court proceedings are set for July 11.

IHH indicated potential future revisions to the compensation amount, citing ongoing conduct by Daiichi Sankyo causing continued losses. The dispute originated in 2018 when IHH purchased a 31% stake in Fortis, necessitating open offers. However, these were halted by a Supreme Court interim order obtained by Daiichi Sankyo.

IHH states that Daiichi Sankyo's dispute with the Singh brothers over Ranbaxy Laboratories acquisition led to proceedings in Delhi High Court and Supreme Court. Despite having no connection with the Singh brothers, IHH claims Daiichi Sankyo presumed such an association existed. To be sure, IHH bought the 31% stake in Fortis from the Singh brothers.

After the Supreme Court's final judgement in September 2022 lifted the interim order, Daiichi Sankyo informed Sebi it would pursue contempt proceedings if it allowed open offers to proceed without Delhi High Court approval. Consequently, IHH remains unable to proceed with the open offers.

IHH's $416 million non-interest bearing deposit maintained for implementing the open offers remains frozen. The company claims additional losses from missed opportunities in Fortis's rising share prices and dividends, which would have accrued through increased ownership post-open offers.