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Calcutta, Sept. 10: ITC Ltd has renewed buying in hospitality major EIH Ltd, picking up a 1 per cent stake in the Oberoi family-run firm which owns The Grand in Calcutta.
ITC’s wholly owned subsidiary Russell Credit bought around 57.44 lakh shares at Rs 73 apiece from HSBC Bank (Mauritius) Ltd, which has now fully exited EIH.
The Calcutta-based tobacco-to-hotels major owned 14.98 per cent in EIH. Today’s transaction will take its consolidated holding to 15.98 per cent.
ITC spent Rs 41.89 crore to pick up this stake. The EIH stock closed at Rs 79.35 on the BSE, going up 3.59 per cent or Rs 2.75 over the closing price on Saturday, while the benchmark Sensex went marginally up by 0.1 per cent.
This is the first time ITC crossed the 15-per-cent-mark in EIH. Earlier, Indian regulations did not allow a non-promoter group to raise stake in another firm by more than 15 per cent without making a mandatory open offer for another 20 per cent. The new takeover code allows firms to go up to 25 per cent without triggering a mandatory offer.
Earlier this year, Reliance Industries took advantage of the new norm to hike its stake in EIH to over 15 per cent. At the end of the June quarter, ITC held a 14.98 per cent stake in EIH, while promoter entities and Reliance Industries Investment and Holding held 35.23 per cent and 18.53 per cent, respectively.
ITC had built a position in EIH in over a decade with the hope that the Oberois would join hands with it at some point. Instead, the Oberois brought in Reliance, thwarting ITC’s ambition. Mukesh Ambani’s wife Nita and close aide Manoj Modi have joined the EIH board.
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