ITC raises stake in EIH by 1%

By : BS Reporter
Last Updated: Tue, Sep 11, 2012 04:01 hrs

Multi-business conglomerate, ITC, has raised its stake in EIH that runs the Oberoi and Trident chain of hotels, by one per cent.

According to bulk data information filed with the stock exchanges, ITC has purchased 5.73 million shares at Rs 73 a share through its subsidiary, Russel Credit, at a total cost of Rs 41.89 crore. The data also shows that HSBC Bank (Mauritius) has sold 5.74 million shares for Rs 41.93 crore. An ITC spokesperson, however, declined to comment.

With this acquisition, ITC’s stake in EIH goes up to 15.89 per cent. The ITC chairman,

Y C Deveshwar, was quizzed at the company’s annual press conference about the company’s game plan for EIH; without divulging much, he said, “When the market is down, is it the right time to sell? The counter-question is, is it the right time to buy?”

ITC has acquired the EIH shares at a price which is a month’s low. The cigarettes-to-hotels major, which has been accumulating shares in EIH since 2000, had kept it almost at a static level of 14.98 per cent, a shade below the earlier 15-per-cent-Sebi trigger for open offer, for a long time.

However, under the new Sebi takeover code, shares can be acquired up to 25 per cent without triggering an open offer.

At one point in time, ITC was keen on a partnership in the form a joint ownership or marketing alliance. However, in 2010, EIH brought in Reliance Industries Ltd (RIL) as a stakeholder in a surprise move to ward off any possible takeover.

RIL checked into EIH through its wholly-owned subsidiary Reliance Industries Investment and Holding that acquired a 14.8 per cent stake from Oberoi Hotels and promoters of EIH. RIL first picked a 14.2-per-cent stake in EIH for Rs 1,021 crore and later increased it to 14.8 per cent.

Not just EIH, ITC has been acquiring shares in another hospitality major Hotel Leela Venture since late-2008.

During the April-June quarter, Russel Credit picked a 1.10 per cent in the Hotel Leela, taking its total stake to 13.98 per cent, while the promoters held a 56.57-per-cent stake.

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