IHH Healthcare Seeks USD 1.7 Billion from Daiichi Sankyo Over Fortis Deal Disruption

Background of the Dispute

The origins of this legal dispute trace back to 2018 when IHH, through its subsidiary Northern TK Venture (NTK), acquired a 31.1% controlling stake in Fortis Healthcare for 40 billion rupees. This transaction triggered an open offer by NTK to acquire an additional 26% of Fortis shares from the market, which would have allowed IHH to gain a significant controlling interest in Fortis, potentially up to 56% of the company.

However, in December 2018, the open offer was abruptly halted. The cancellation came after Daiichi Sankyo filed a contempt plea against the founders of Fortis Healthcare, Malvinder and Shivinder Mohan Singh. Daiichi Sankyo accused the Singh brothers of concealing vital information about their pharmaceutical company, Ranbaxy, which was under investigation by the U.S. Food and Drug Administration and the Department of Justice. This allegation related to the Singh brothers’ sale of Ranbaxy shares to Daiichi Sankyo.

As a result of the legal challenge from Daiichi Sankyo, a court ruling mandated that the status quo be maintained regarding the sale of a controlling stake in Fortis. Consequently, IHH was unable to proceed with its open offer, which would have provided it with a majority stake in Fortis and control over Fortis Malar Healthcare Ltd.

Also Read: Proceed with Fortis open offer only after Delhi HC nod: SEBI to IHH

Development of the Legal Case

In October 2023, IHH’s subsidiary NTK filed a formal legal claim against Daiichi Sankyo, seeking compensation for the disruption caused by Daiichi Sankyo’s interference in the acquisition process. NTK initially sought 20 billion Japanese yen (around $178 million) in damages, along with an annual interest rate of 3%. However, following a detailed report by the consultant Osborne Partners, which NTK had appointed to assess the financial impact, IHH revised its claim. The report estimated that the damages could range from 200 million Malaysian Ringgit (approximately $42 million) to 5.7 billion Malaysian Ringgit (around $1.3 billion), depending on the parameters used for calculation, reports The Edge Singapore.

The new figures were filed with the Tokyo District Court on February 6, 2025, alongside a statement indicating that NTK reserved the right to amend its claim further, including the potential addition of other losses and legal fees incurred during the case.

According to Reuters report, industry analysts are closely monitoring the case, as the outcome could set a precedent for similar corporate disputes in the healthcare sector. The next hearing in the case is scheduled for February 13, 2025, at the Tokyo District Court.

As of now, Daiichi Sankyo has not issued any public statements in response to IHH’s revised claim, and Fortis Healthcare has indicated that it will update its shareholders on any significant developments related to the case.