Apollo exits Sri Lanka

[TamilNet, Friday, 15 September 2006, 19:37 GMT]
India's Apollo Hospitals has decided to exit its operations in Sri Lanka after failing to stave off a hostile takeover bid by a local business tycoon, press agency reports said Thursday. The Indian parent has been engaged in a bitter row recently to retain ownership and had Indian High Commissioner Nirupama Rao intervene on behalf of the company to secure their holding, PTI reported.

On Thursday Apollo sold 52 million shares in Lanka Hospitals Corporation, the owners of Apollo Sri Lanka, to the Sri Lanka Insurance Corporation which is owned by business tycoon Harry Jayawardena.

Apollo accepted a mandatory offer made by Jayawardena to buy each share at 28 rupees after he acquired more than one third of the company recently. The deal was worth 1,456 million rupees.

Two other minority shareholders of Apollo, Sino-Lanka which had three per cent and R Navaratnam, a key promoter of Apollo in Sri Lanka, who had five per cent were also sold out to the Insurance company.

Apart from the Indian government, the Sri Lankan government is also said to have supported Apollo by threatening to withhold tax concessions if the takeover went through.

But Jayawardene’s Stassens Group which controls SLIC has cordial relations with all political parties in Sri Lanka, and analysts say the government stand could have changed at any time, Lanka Business Online (LBO) reported.

In addition to management expenses, Apollo was also hit by not having popular Sri Lankan doctors working with the hospital, LBO quoted analysts as saying. The report did not elaborate.