Leela to lean on 'friend' Mukesh in case of takeover bid

A partnership with Reliance Industries (RIL) Chairman Mukesh Ambani will be the first choice for the Leela group of hotels in case of a hostile takeover bid by ITC or any other entity, Chairman C P Krishnan Nair has said.

He was speaking at a press conference to announce the opening of the group’s property here.

On ITC gradually raising stake in Leela and the possibility of a hostile bid, Nair, 89, said the company would approach close friend Mukesh Ambani for investment in such an event.

RIL had last year picked up a 14.80 per cent stake in EIH Ltd, which runs the Oberoi and Trident brands of hotels and resorts. This was believed to be aimed at thwarting a hostile takeover bid by ITC, which holds 14.98 per cent in the chain.

“Mukesh is a very close friend of my son. He will be our first choice. If there is a threat of a hostile bid, he is available,” he said.

Later, the group said Nair’s reference to Ambani was in response to a hypothetical question on what would be his next move if there was a hostile takeover threat from ITC. “It was a casual remark based on the relationship he has enjoyed with the Ambani family for over four decades, and therefore, should not be construed as a definitive measure being planned or undertaken by the management,” it said.

On succession at the hospitality chain he set up more than two decades ago, Nair told Business Standard he would retire as chairman in June and his sons—Vivek Nair and Dinesh Nair—would be named chairman and vice-chairman, respectively.

“My plan will be to be by their side and help them. If they need my advice, I will give it to them,” he said.

Nair started his career in the Army. He then stepped into textiles, before opening the first Leela hotel at the age of 65.

At present, Vivek Nair is the vice-chairman and managing director, while Dinesh Nair is the joint managing director.

The promoters hold 55 per cent in Leelaventures. ITC holds 12.9 per cent.

The group plans to raise Rs 1,950 crore by selling 14.9 per cent equity to one or two private equity firms, besides land in Bangalore, Hyderabad, Pune and Chennai. The group plans to halve its Rs 3,800 crore debt by 2012. This will bring down the promoters’ stake to 50 per cent. “We intend to buy our equity later through funds available to the company,” said Vivek Nair.

The company is also planning to start budget hotels by 2013. It plans to tap pilgrimage centres such as like Hardwar, Rishikesh, Nalanda and Nasik. The business will be headed by Capt Nair’s grand daughter, Samyuktha Nair.