ITC reviewing options on EIH equity

Counter offer, stake sale being mulled.

Cigarettes-to-hospitality group ITC is reviewing its approach on equity in EIH, which runs the Oberoi chain of hotels.

Speaking to Business Standard, ITC Chairman Y C Deveshwar said, “We are rethinking, which would mean making a counter offer or selling our stake. In both cases, the board will decide. However, I am not disposed towards a hostile takeover.”

Earlier, on the sidelines of the CII-ITC Sustainability Summit, Deveshwar said the company was open to increasing stake in EIH. Asked about investor Analjit Singh’s reported plans to buy another 17 per cent stake in EIH, Deveshwar said, “If somebody else is entering the fray I do not discount, we can do our re-thinking. If any new event takes place, I am not saying that we will stop thinking.”

An EIH spokesperson said the company would not comment on the basis of speculation.

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. Deveshwar announced at ITC’s last annual general meeting (AGM) that 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.

Non-cigarette FMCG biz: PTI adds: ITC said it could take a decade for its non-cigarette fast moving consumer goods (FMCG) business to be profitable as it continues to expand product portfolio, thereby requiring fresh investments in brand building.

The company saw its non-cigarette FMCG business registering a loss of Rs 184.79 crore in the first half of this fiscal, an improvement from a loss of Rs 239.16 crore in the same period last year.