Description
corporate war of Reliance Industries and ITC over stake in EIH.
Tapas Gupta Manan Pamani
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The Oberoi Group, founded in 1934, owns and/or operates 29 hotels and 3 cruise liners in five countries.
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It remains one of the most decorated hotel chains in the world with many of its group hotels bagging various awards and accolades
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ITC is an Indian public conglomerate company headquartered in Kolkata. Its diversified business includes four segments: FMCG, Hotels, Paperboards, Paper & Packaging and Agri Business. ITC own Maurya, Shereton and Welcome group of hotels.
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Reliance Industries Limited is an Indian conglomerate company headquartered in Mumbai. The company operates through three business segments: petrochemicals, refining, and oil and gas, other segment of the company includes textile, retail business, special economic zone (SEZ) development and telecom/broadband business. RIL is the largest publicly traded company in India by market capitalization.
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ITC buys stake in EIH and Leela hotels – its competitors EIH perceives a threat from ITC of a hostile bid RIL buys 14.8% stake in EIH and nominates 2 directors on EIH board
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EIH Shareholding Pattern
Promoter Holding ITC Ltd. Reliance Inds Investment & Holding Pvt Ltd. 34.60% 14.98% 14.80%
Shareholding Pattern of EIH Associated Hotels
Foreign (Promoter & Group)
Indian (Promoter & Group) Total of Promoter
22.2682
52.7292 74.9974
Non Promoter (Institution) 6.36%
2.06% Non Promoter (Non-Institution) Total Non Promoter
14.4171
10.5854 25.0025
LIC of India
New India Assurance
GIC of India
1.79%
CMP – Rs. 84.55
CMP – Rs. 130 Market Cap – 262.11 Cr.
Market Cap – Rs. 4832.46 Cr.
CMP – Rs.198 Market Cap – Rs. 154,674 Cr. Major Shareholders
Tobacco Manufacturers India Ltd LIC of India Specified Undertaking Of the Unit Trust Of India Myddleton Investment Company Ltd New India Assurance Company Ltd GIC of India Oriental Insurance Company Ltd National Insurance Company Ltd ICICI Prudential Life Insurance Company Ltd Rothmans International Enterprises Ltd 25.54 12.52 11.54 4.17 2.13 1.87 1.67 1.65 1.43 1.33
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14.12% stake for Rs. 184 (22% premium over the then Market rice of Rs. 151) on Aug. 30, 2010. Additional 0.68% the next day, taking the total holding to 14.80%. It paid a total of Rs. 1021 Cr. Promoter Holding dropped from 46.43% to 32.31%
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5:11 ratio (5 additional shares offered for every 11 shares held) at Rs. 65 (Nearly 30% discount to the prevailing Market price) a share from March 1 to March 15, 2011.
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Planned to raise Rs. 1160 Cr. All the 3 important entities subscribed proportionately. Normally in a rights issue, you can actually renounce your right and once you renounce it, you - as a fresh investor have the opportunity of applying for additional. But in this EIH rights issue, there is no facility where you can apply for an additional share as a renouncee, as a new investor in the rights issue.
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RIL bought 14.9% in EIH in August 2010 for 1,021 Crores On 1st Nov 2011, Nita Ambani and Manoj Modi join EIH board as non-executive nonindependent directors Manoj Modi is childhood friend and a top executive of Mukesh Ambani Reliance also plans to enter hospitality business with luxury hotels
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Also inducted Robert Henry Burns, a veteran from the hotel industry and Renu Sud Karnad, joint MD at HDFC, India's largest mortgage firm.
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This move has created a formidable barrier for the ITC to take control over EIH. Acted as a whiteknight – only financial investment "This is a brilliant defensive ploy. Nobody would threaten a company when an Ambani is on board” said a senior market analyst In the early 1990s, group founder Dhirubhai Ambani had acted as a white knight to help ward off a takeover threat faced by engineering and construction conglomerate Larsen and Toubro Ltd (L&T) from the late Manu Chhabria, who then retreated from the race.
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Vikram Oberoi is eldest son of P.R.S Oberoi and Arjun Oberoi is son of late T.R Oberoi, elder brother of P.R.S Oberoi Vikram – Chief Operating Officer Arjun – Chief Planning Officer
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Reliance buys stake from Oberoi family The move came six days after Oberoi indicated at a press conference in Kolkata that his son Vikram Oberoi and nephew Arjun Oberoi, both joint managing directors of EIH, might not work together after him.
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ITC's intention to invest significant stakes in hotel chains such as EIH and Hotel Leela was considered in some quarters as hostile to the promoters of the two companies as it competes with the two companies in the same sector.
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ITC has on several occasions denied any hostile bid and has been maintaining that the stake in EIH was purely an investment.
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On 30 July 2011, in 100th annual general meeting Y.C. Deveshwar told,“We invested in EIH at a price of Rs35 while others invested at a much higher price. This is the reason our investments are confined to industries, by and large, where we operate. It’s not only that we would invest in these two companies, we could also invest in other hotel companies, we could also invest in other fast moving consumer goods companies. We could also invest also in agri-products businesses, even information technology companies,”
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In 2009 ITC board meeting, Y.C.Deveshwar ruled out possibility of any hostile bid for EIH. "If they join hands with us, it would be beneficial for both," Deveshwar said. ITC chairman Y.C. Deveshwar has maintained for the last 10 years that his company would not make a hostile bid to seize control of EIH,
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ITC’s current Chairman and CEO is Mr. Y.C.Deveshwar – the longest serving chairman for ITC – since 1996
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On 5th April 2012, he will become nonexecutive chairman. The new SEBI laws allow acquisition upto 25% without triggering open offer.
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doc_906728464.pdf
corporate war of Reliance Industries and ITC over stake in EIH.
Tapas Gupta Manan Pamani
?
The Oberoi Group, founded in 1934, owns and/or operates 29 hotels and 3 cruise liners in five countries.
?
It remains one of the most decorated hotel chains in the world with many of its group hotels bagging various awards and accolades
?
ITC is an Indian public conglomerate company headquartered in Kolkata. Its diversified business includes four segments: FMCG, Hotels, Paperboards, Paper & Packaging and Agri Business. ITC own Maurya, Shereton and Welcome group of hotels.
?
?
Reliance Industries Limited is an Indian conglomerate company headquartered in Mumbai. The company operates through three business segments: petrochemicals, refining, and oil and gas, other segment of the company includes textile, retail business, special economic zone (SEZ) development and telecom/broadband business. RIL is the largest publicly traded company in India by market capitalization.
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ITC buys stake in EIH and Leela hotels – its competitors EIH perceives a threat from ITC of a hostile bid RIL buys 14.8% stake in EIH and nominates 2 directors on EIH board
?
?
EIH Shareholding Pattern
Promoter Holding ITC Ltd. Reliance Inds Investment & Holding Pvt Ltd. 34.60% 14.98% 14.80%
Shareholding Pattern of EIH Associated Hotels
Foreign (Promoter & Group)
Indian (Promoter & Group) Total of Promoter
22.2682
52.7292 74.9974
Non Promoter (Institution) 6.36%
2.06% Non Promoter (Non-Institution) Total Non Promoter
14.4171
10.5854 25.0025
LIC of India
New India Assurance
GIC of India
1.79%
CMP – Rs. 84.55
CMP – Rs. 130 Market Cap – 262.11 Cr.
Market Cap – Rs. 4832.46 Cr.
CMP – Rs.198 Market Cap – Rs. 154,674 Cr. Major Shareholders
Tobacco Manufacturers India Ltd LIC of India Specified Undertaking Of the Unit Trust Of India Myddleton Investment Company Ltd New India Assurance Company Ltd GIC of India Oriental Insurance Company Ltd National Insurance Company Ltd ICICI Prudential Life Insurance Company Ltd Rothmans International Enterprises Ltd 25.54 12.52 11.54 4.17 2.13 1.87 1.67 1.65 1.43 1.33
?
14.12% stake for Rs. 184 (22% premium over the then Market rice of Rs. 151) on Aug. 30, 2010. Additional 0.68% the next day, taking the total holding to 14.80%. It paid a total of Rs. 1021 Cr. Promoter Holding dropped from 46.43% to 32.31%
?
?
5:11 ratio (5 additional shares offered for every 11 shares held) at Rs. 65 (Nearly 30% discount to the prevailing Market price) a share from March 1 to March 15, 2011.
?
Planned to raise Rs. 1160 Cr. All the 3 important entities subscribed proportionately. Normally in a rights issue, you can actually renounce your right and once you renounce it, you - as a fresh investor have the opportunity of applying for additional. But in this EIH rights issue, there is no facility where you can apply for an additional share as a renouncee, as a new investor in the rights issue.
?
?
?
?
?
?
RIL bought 14.9% in EIH in August 2010 for 1,021 Crores On 1st Nov 2011, Nita Ambani and Manoj Modi join EIH board as non-executive nonindependent directors Manoj Modi is childhood friend and a top executive of Mukesh Ambani Reliance also plans to enter hospitality business with luxury hotels
?
Also inducted Robert Henry Burns, a veteran from the hotel industry and Renu Sud Karnad, joint MD at HDFC, India's largest mortgage firm.
?
?
This move has created a formidable barrier for the ITC to take control over EIH. Acted as a whiteknight – only financial investment "This is a brilliant defensive ploy. Nobody would threaten a company when an Ambani is on board” said a senior market analyst In the early 1990s, group founder Dhirubhai Ambani had acted as a white knight to help ward off a takeover threat faced by engineering and construction conglomerate Larsen and Toubro Ltd (L&T) from the late Manu Chhabria, who then retreated from the race.
?
?
?
?
?
Vikram Oberoi is eldest son of P.R.S Oberoi and Arjun Oberoi is son of late T.R Oberoi, elder brother of P.R.S Oberoi Vikram – Chief Operating Officer Arjun – Chief Planning Officer
?
?
Reliance buys stake from Oberoi family The move came six days after Oberoi indicated at a press conference in Kolkata that his son Vikram Oberoi and nephew Arjun Oberoi, both joint managing directors of EIH, might not work together after him.
?
ITC's intention to invest significant stakes in hotel chains such as EIH and Hotel Leela was considered in some quarters as hostile to the promoters of the two companies as it competes with the two companies in the same sector.
?
ITC has on several occasions denied any hostile bid and has been maintaining that the stake in EIH was purely an investment.
?
On 30 July 2011, in 100th annual general meeting Y.C. Deveshwar told,“We invested in EIH at a price of Rs35 while others invested at a much higher price. This is the reason our investments are confined to industries, by and large, where we operate. It’s not only that we would invest in these two companies, we could also invest in other hotel companies, we could also invest in other fast moving consumer goods companies. We could also invest also in agri-products businesses, even information technology companies,”
?
In 2009 ITC board meeting, Y.C.Deveshwar ruled out possibility of any hostile bid for EIH. "If they join hands with us, it would be beneficial for both," Deveshwar said. ITC chairman Y.C. Deveshwar has maintained for the last 10 years that his company would not make a hostile bid to seize control of EIH,
?
?
?
ITC’s current Chairman and CEO is Mr. Y.C.Deveshwar – the longest serving chairman for ITC – since 1996
?
On 5th April 2012, he will become nonexecutive chairman. The new SEBI laws allow acquisition upto 25% without triggering open offer.
?
doc_906728464.pdf