ITC open to raising stake up to 25% in EIH

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 today asserted that his company could even raise its stake up to 25 per cent in EIH.

“We are open to increasing our stake in the company but even if we do so, it (the stake) will not exceed 25 per cent,” Deveshwar told reporters here on the sidelines of the conference. He added, “No company remains shut on thinking and ideas,” with a rider that “the decision lies with the board”.

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.

Deveshwar’s comments come a day after he indicated that 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.

Deveshwar had said on Wednesday that “If somebody (read Analjit) else is entering the fray, I do not discount that we will rethink. If any new events take place, I am not saying that we will stop thinking.”

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.

On ITC Group’s expansion in the hospitality sector, Deveshwar had said the company was looking for both organic and inorganic growth but would broadly focus on the domestic sector.

Shares of EIH today closed at Rs 138.60 on the Bombay Stock Exchange, up 4.52 per cent over previous close.