Fortis's Acquisition of Wockhardt Hospitals
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Case Code: BSTR357 Case Length: 17 Pages Period: 2008-2009 Pub Date: 2010 Teaching Note: Not Available |
Price: Rs.300 Organization: Fortis Healthcare Ltd., Wockhardt Hospitals Group Industry: Healthcare, Hospitals Countries: India Themes: Growth strategy, Mergers and Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Abstract
In late 2009, Fortis Healthcare Ltd. (Fortis), a hospital chain established by the promoters of Ranbaxy Laboratories Limited (RLL), acquired 10 hospitals of the Wockhardt Hospitals Group (Wockhardt Hospitals), a subsidiary of Wockhardt Ltd. (Wockhardt) for Rs. 9.09 billion. The acquisition was hailed by experts as the biggest in the Indian healthcare industry. It was expected to benefit both Fortis and Wockhardt Hospitals. Through this acquisition, Fortis was able to expand its network of hospitals. Besides, the acquisition would help it have a presence in the southern, eastern, and western states of India thereby fortifying its position as one of the leading healthcare providers in India. It would also give Fortis access to Wockhardt Hospitals' management team.
Moreover, it was also expected to help Fortis realize its ambition of owning 6,000 beds and becoming a US$ 1 billion revenue earning company by 2012. Wockhardt Hospitals was expected to benefit from the acquisition as it would be able to reduce its debt burden of Rs. 5 billion of the total debt of Rs. 34 billion. Besides, it planned to expand its hospitals with the remaining money. Some analysts opined that the deal would strengthen Fortis's position in the healthcare industry in India. However, some analysts also felt that Fortis had to overcome various challenges before it could reap the benefits from the deal.
Issues
The case is structured to achieve the following teaching objectives
- Understand and appreciate the role of mergers and acquisitions as a growth strategy
- Understand and discuss the rationale behind Fortis's acquisition of Wockhardt Hospitals
- Discuss the advantages and disadvantages of this decision from both Fortis's and Wockhardt Hospitals' point of view
- Identify the challenges Fortis is going to face in the future and explore strategies it can adopt to overcome the challenges
Contents
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Fortis Gains a Pan-India Presence
Background Note
The Acquisition
The Benefits
Looking Ahead
Exhibits
Keywords
Growth strategy, Organic growth, Inorganic growth, Mergers and acquisitions, M&A, Post-merger integration, Indian healthcare industry, Hospital chain, Fortis, Wockhardt, Apollo
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