ITC will hold about 40 per cent stake in ITC Hotels and the balance shareholding of about 60 per cent will be held directly by the company’s shareholders proportionate to their shareholding in the company
ITC Hotel Business Demerger: Diversified conglomerate ITC on Monday said it will demerge its hotel business by incorporating wholly-owned subsidiary ITC Hotels Ltd. The new subsidiary will handle ITC’s hotels and hospitality business.
“The Board of Directors of ITC Ltd at its meeting held on July 24, 2023, evaluated and discussed various alternative structures for the Hotels Business. After due consideration, the Board accorded its in-principle approval to the demerger of Hotels Business under a scheme of arrangement,” the company said in a regulatory filing.
It added that after due consideration, the board accorded its in-principle approval to the demerger of hotels business under a scheme of arrangement, with the company holding a stake of about 40 per cent in the new entity and the balance shareholding of about 60 per cent to be held directly by the company’s shareholders proportionate to their shareholding in the company.
The scheme of arrangement shall be placed for approval of the board at its next meeting to be convened on August 14, 2023.
According to the filing, the proposed reorganisation would ensure continued interest of the company in the hospitality business, provide long-term stability and strategic support to the new entity in its pursuit of accelerating growth and sustained value creation as also enable leveraging of cross synergies between the company and the new entity.
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Sanjiv Puri, chairman of ITC, said, “The proposed demerger of the hotels business is testament to the company’s commitment to creating sustained value for stakeholders. The creation of a hospitality-focused entity will engender the next horizon of growth and value creation by harnessing the exciting opportunities in the Indian hospitality industry.”
In the proposed reorganisation, both ITC and the new entity will continue to benefit from institutional synergies, he said.
ITC will be paying cash consideration to ITC Hotels towards subscription of shares of face value of Rs 1 each at par, not exceeding Rs 100 crore in aggregate.
“The company will own 100 per cent of the issued and subscribed share capital of the WOS (wholly owned subsidiary) at the time of incorporation,” ITC said in the filing.
Launched in 1975, ITC’s hotel business includes 120 hotels and 11,600 keys across 70-plus locations.
Shares of ITC on Monday declined Rs 19.90 or 4.06 per cent to close at Rs 469.95 apiece on the BSE.
