EIH, EIH Associate rally on new takeover code

EIH and its group company EIH Associated Hotels have rallied more than 9% after the Securities and Exchange Board of India (Sebi) notified the new law governing takeover of listed firms with effect from on October 22, 2011.

Under the new law, the size of the open offer to be made by acquirers was increased to 26% from the earlier 20%. The open offer trigger limit has been increased from 15% to 25%. The market regulator also scrapped a non-compete fee.

The new takeover code gives Reliance Industries and ITC more room to buy another 10% — till 25%. India’s largest company in terms of market capitalisation and the fast moving consumer goods (FMCG) firm held a little less than 15% stake each in EIH, is expected to acquire more shares in the company.
 
EIH Associated Hotels has frozen upper circuit of 10% at Rs 172 and EIH has rallied more than 10% to Rs 93.35 on the Bombay Stock Exchange (BSE). The trading volumes on both these counters more than doubled compared to average volumes in last ten trading days.