Apollo – why, oh, why?

Apollo Colombo’s India backers not only sold out to Sri Lanka’s corporate raider, Harry Jayawardene but also to the two governments. What a let down for India and Sri Lanka which came to their rescue to resist the hostile takeover bid.

The Indian High Commissioner Nirupama Rao, likely to be posted to China in October as her country’s new envoy stuck her neck out for Lanka Hospitals Corporation Ltd and got bashed in the process by Tourism Minister Anura Bandaranaike who many felt took up the case in parliament on behalf of his friend, Jayawardene. There was drama over Anura’s statement with President Mahinda Rajapaksa distancing himself and the government from the comments and Foreign Minister Mangala Samaraweera issuing a statement reiterating the good relations between the two countries.

Responding to a government request, the Board of Investment (BOI) however put its foot in the mouth by threatening to withdraw concessions granted to the hospital company if the ownership changed – little realizing (or even knowing) that a listed company can be taken over by anyone so long as procedures are followed.

The BOI stuck to its guns and still continues to do so even though it is clear to all and sundry that Harry Jayawardene or any other shareholder for that matter has a legitimate right to acquire up any listed company.

As the drama unfolded in the past six to eight weeks, Apollo’s local directors insisted they were not selling out and ready to take on Harry & Co (winning against Harry J however, is no easy task).

Then investment advisor Burah Hathy appointed by the hospital company said in a report that the mandatory offer by Sri Lanka Insurance (SLIC) was an ‘attractive offer’ implying that shareholders should take up the offer. Just before the mandatory offer ended on Thursday, Apollo said it was accepting the offer and exiting from the company. “The decision was taken after considerable deliberation, keeping in mind our clear objectives of increasing our own shareholder value and long term business goals,” said Suneeta Reddy, Executive Director, Finance, Apollo Hospitals Enterprise Ltd. “With only a minority share holding, it would have been difficult for Apollo Hospitals to operate effectively. And fortunately, Apollo has found that the offer made by SLI is adequate and good enough to accept,” Reddy said.

Thus a high-stakes battle for control of Apollo expected after the mandatory offer closed, ended without a whimper with the hospital company meekly accepting ‘defeat’ after a fight that included dragging two governments and issuing grandiose statements of “special category investment’ and ‘India’s flagship investment’ from India and Sri Lanka.

Is there more that meets the eye in these events? Many think so given the way Apollo defiantly stood up to the mighty Harry J and then suddenly wilted.

Questions are being asked like for instance why did Apollo give in after dragging two governments into the fray to protect its interests; was the investment advisor’s report telling shareholders that SLIC’s offer was ‘attractive’ the escape route Apollo needed to sell out or was the hospital company under threat by the raider of being exposed on some ‘improper’ dealings’ or siphoning out funds? Doing the rounds of the stockmarket was also the issue of whether there was a bigger financial package than the traded share price in the final settlement.

The icing on the cake was Apollo’s local director and promoter, R. Navaratnam selling out himself after all the fierce resistance, expressed at least when the media asked him for comments.

To most market analysts, the price in the mandatory offer was an attractive one given the financial health of the company and no one needed a financial advisor to explain that. “The offer was attractive as Apollo’s bottomline is poor,” one analyst said.

So once against another company – despite the power of two countries – bites the dust under a Harry J raid who adds hospitals to his growing list of acquisitions and interests. This, despite his owing two billion rupees to the government, according to PERC, over the SLIC privatisation. Such is his power. What’s he eyeing next?