The stock price of Kolkata-based EIH, the flagship company of the Oberoi group that owns hotels, restaurants and bars across the country, hit a 52-week peak on the Bombay Stock Exchange (BSE) as the promoters confirmed that they were in talks for a possible stake sale.
The stock zoomed to an intra-day high of Rs 149 on Thursday before closing at Rs 136.25, an increase of 7.24 per cent over its previous day's close of Rs 127.05 on the BSE. This, despite the fact that the company formally clarified during the trading session that "it is not privy to the stake-sale purpose of the promoters".
Earlier in the day, media reports stated that promoters of EIH were mulling off-loading a stake in the company to Max India founder and Chairman Analjit Singh.
EIH has a number of luxury hotels operating under its fold across premium landscapes and is one of the top three hotel chains in the country. The other two are ITC and Indian Hotels Company Ltd.
In a statement, EIH Chairman P R S Oberoi said: "The matter is under deliberation. No decision has been taken." An official statement from Max India quoting Analjit Singh stated the same.
As on September 30, Russel Credit, a 100 per cent subsidiary of ITC Ltd, held a 14.98 per cent stake in EIH. The Kolkata-based ITC, which has interests in cigarettes, tobacco products, fast moving consumer goods and hospitality, has also been looking to increase its stake in EIH.
Together with Russel Credit, Life Insurance Corporation, New India Assurance and Reliance Capital, among four others, hold a 32.02 per cent stake in EIH.
All eyes on ITC
The FMCG major is just 0.2 per cent short of the threshold limit of 15 per cent which, according to Securities and Exchange Board of India (Sebi) guidelines, would trigger a mandatory open offer for 20 per cent equity of the company. However, a company source said it was unlikely that ITC would now ramp up its holding in light of the changed circumstances and make a hostile bid after Chairman Y C Deveshwar had already said at the company's annual general meeting (AGM) that it was not interested in a hostile takeover.
Subsequently, EIH Chairman P R S Oberoi had responded at the EIH AGM that it was up to ITC to come up with a proposal.
When contacted, Deveshwar declined comment.
ITC has been buying EIH shares through its investment arm, Russell Credit, since 2000.
