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    ITC likely to check out of The Oberoi: Will RIL hike stake in EIH?

    Synopsis

    Reliance Industrial Investments already held an 18.53% stake in the company as of June 30.

    Reliance keen to buy out ITC's stake in EIH

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    Mukesh Ambani’s RIL, which had checked into The Oberoi Group of Hotels’ flagship listed entity EIH in 2010, is looking to increase stake, multiple sources told ETNOW. The sources said feelers have been sent to ITC Chairman Sanjiv Puri to acquire part or the entire 16.13 per cent stake that the FMCG major holds in EIH.

    As of now, RIL can buy a little over 6 per cent stake in EIH from ITC without triggering an open offer.

    ETNOW learnt RIL is unlikely to trigger an open offer without the blessing of legendary hotelier PRS Oberoi, popularly called Bikki by his friends. The sources said the onus would be on him to arrive at a solution that is mutually acceptable to ITC, RIL, and which is in the long-term interests of PRS Oberoi’s son Vikram Oberoi and nephew Arjun Oberoi.

    ITC did not respond to ETNOW’s detailed questionnaire. When contacted, RIL told ETNOW, “Your information is incorrect and there are no plans to hike stake.” The Oberoi Group said, “We do not comment on market speculation.”

    In 2010, veteran hotelier PRS Oberoi had brought in Mukesh Ambani’s RIL as a white knight to thwart a hostile takeover by ITC, then headed by the legendary YC Deveshwar. Nine years later, ITC under the Chairmanship of Sanjiv Puri is believed to be reviewing its investment in The Oberoi Group and EIH.

    Since ITC has been relegated to being only an equity investor with its 16 per cent-plus stake, it is believed to be considering an exit to channel the investment elsewhere.

    ITC’s plan to fully or partly offload its stake in EIH coincides with its move at NCLT against the sale of Hotel Leelaventure to Canadian giant Brookfield on the grounds of oppression of minority shareholders.

    Interestingly, JM Financial ARC, whose parent owns 26 per cent in Hotel Leelaventure, has argued in NCLT that ITC was trying to acquire Leela Hotels ‘for a song’.

    Sources said in 2010, RIL and Mukesh Ambani had promised EIH it would never launch an open offer for the company. This is also believed to be in writing in the documents that were signed between the parties in 2010. Perhaps that was the reason why PRS Oberoi called RIL a ‘friendly investor’ in the past. The big question is, if ITC decides to exit, will PRS Oberoi want RIL to be a buyer of that stake?

    Currently, Mukesh Ambani’s wife Nita Ambani and trusted close aide Manoj Modi are both on the board of EIH. According to filings on the stock exchanges, RIL holds 18.85 per cent in EIH, which it holds via Reliance Industrial Investment & Holdings.
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    6 Comments on this Story

    Surendra Sachdeva384 days ago
    Return bank loans of RIL &ADG soon
    Shiv Sharma384 days ago
    bhagwa sanghvi Jain must understand,,, goat mutton cost rs 550 per kg,,, hilsa fish cost rs1200 per kg,, in short, one kg of hilsa fish cost more than one share of RIL,, miser community can''t afford non veg, better be vegan,,, animals milk is for their babies, not for jainis,,,, i dont care if some pure veggies feeling / sentiments has been hurt.
    Ramesh Chengappa384 days ago
    does he think the whole world consists of Jains. I certainly respect the religion though I declare myself as an atheist.
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