ITC open to raising stake up to 25% in EIH

ITC Ltd. | Cigarettes/Tobacco | FMCG | BSE: 500875 | NSE: ITC

27 Nov 2009 Evaluate

Following reports that the cigarettes-to-hospitality major, ITC, could make a hostile bid to increase its stake in EIH, which runs the Oberoi hotel chain, ITC Chairman Y C Deveshwar asserted that ITC could even raise its stake up to 25 per cent in EIH. If the ITC board opts to raise its stake to 25 per cent, it will be just one per cent short of the level which will give it the power to veto special resolutions of the board.

However, it will simultaneously have to make an open offer for acquiring an additional 20 per cent, under the compulsory rule of the Securities and Exchange Board of India (Sebi). ITC’s present 14.98 per cent stake in EIH is just short of this trigger, which takes effect at 15 per cent.

ITC make not be dormant while Max India Chairman Analjit Singh plans to buy another 17 per cent stake in EIH. Singh currently holds nine per cent in EIH. If somebody (read Analjit) else is entering the fray, ITCwill rethink its startegy. Till recently, ITC is reported to have been in talks with the Oberois for a partnership, and has maintained that it was not looking at a hostile bid for EIH.

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