ITC reviewing options on EIH equity

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

26 Nov 2009 Evaluate

Cigarettes-to-hospitality group ITC is reviewing its approach on equity in EIH, which runs the Oberoi chain of hotels. The company is eyeing to either make a counter offer or selling its stake. In both cases, the board will decide.

ITC has a 14.98 per cent stake in EIH, a shade less than the Securities and Exchange Board of India (Sebi) threshold limit of 15 per cent that triggers a mandatory open offer for another 20 per cent.

ITC has been buying EIH shares through its investment arm, Russell Credit, since 2000. The company was not in favour of a hostile takeover for EIH and even suggested joining hands for a joint ownership or marketing, but that was prior to the news of Analjit Singh buying into EIH. Subsequently, EIH Chairman P R S Oberoi responded at his AGM that it was up to ITC to make a proposal.

Last month, news broke that Oberoi had signed a non-disclosure pact for a deal that would see the Oberoi family, which owned a 43 per cent stake in EIH, selling over 17 per cent to Singh for around Rs 1,250 crore.

Singh, who already holds a 5 per cent stake in the hospitality major, would have to make a mandatory open offer for an additional 20 per cent stake. This means Singh’s stake will be more than the Oberoi family’s 26 per cent.

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