Fortis's Acquisition of Wockhardt Hospitals

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR357 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges

Themes

Growth strategy / Mergers and Acquisitions
Case Length : 17 Pages
Period : 2008-2009
Pub Date : 2010
Teaching Note : Not Available
Organization : Fortis Healthcare Ltd. / Wockhardt Hospitals Group
Industry : Healthcare / Hospitals
Countries : India

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.

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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:

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:

  Page No.
Fortis Gains a Pan-India Presence 1
Background Note 2
The Acquisition 5
The Benefits 6
Looking Ahead 8
Exhibits 10

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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