ITC may hike stake upto 25% in EIH & Hotel Leela: Deveshwar
Published on Fri, Jan 27, 2012 at 13:15 | Source : CNBC-TV18

ITC chairman YC Deveshwar has said that his company may increase stake in the Oberois controlled- EIH and Krishnan Nair-owned Hotel Leela , if the prices are attractive.

In the same breath, he added that it was for the treasury division to take a call on that. Speaking to CNBC-TV18, Deveshwar said the company's investments in EIH and Hotel Leela were purely treasury decisions. "We are a buyer and seller in EIH, Hotel Leela at the right price," Deveshwar told CNBC-TV18.

Under the new Sebi takeover code, an acquirer can buy up to 25% in a target company without having to make an open offer.

Earlier, the threshold limit beyond which the acquirer had to compulsorily make an open offer was 15%. ITC holds 14.98% in EIH, and a little over 13% in Hotel Leela, as on December 31, 2011.

ITC started buying EIH shares in 2001, and built its stake in Hotel Leela over the last three years. While Deveshwar may deny any plans of taking control of the two firms, the market is skeptical if ITC will be content to remain a passive investor in these companies for long.

More so, in the light of the latest statement by Deveshwar, who expects also shares of hotel companies to underperform near term because of poor earnings arising from a sluggish global economy. On Wednesday, Indian Hotels reported a tepid 7.4% year-on-year growth in quarterly revenues, despite the quarter being the best for the hospitality sector in general.

In August 2010, RIL picked up a 14.2% stake in EIH, ostensibly to help the Oberois pre-empt a hostile bid by ITC. Market watchers are keenly watching if ITC would want to challenge the Ambanis by increasing their stake in EIH to the maximum permissible 25%.