KOLKATA: The board of ITC on Wednesday approved the merger of its subsidiaries, ITC Hotels and Ansal Hotels, with itself. The proposed merger, however, does not include Bay Islands Hotels, a wholly-owned subsidiary of ITC Hotels, with ITC.
Insiders refused to elaborate on the board decision on merger of Bay Island with ITC, saying, “All we know is that post-amalgamation of ITC Hotels with ITC, Bay Islands will become a wholly-owned subsidiary of ITC.”
The statement issued after the company’s board meeting held in Kolkata also does not mention Bay Islands Hotels at Port Blair. JM Morgan Stanley acted as advisors to the transaction.
All the three companies held their meetings in Kolkata during the day. On the proposed merger, ITC said ITC Hotels shareholders will get three shares of ITC for every 25 shares held by them.
On the other hand, Ansal Hotels shareholders will get one share of the parent ITC for every 150 shares held by them. Consultants SB Billimoria and Company (SBB), along with former managing partner, YH Malegam assisted ITC to carry out the valuation exercise and determine the share exchange ratio.
On Wednesday, ITC stock closed at Rs 1,033.25. It touched an intra-day high of Rs 1,040.45 and intra-day low of Rs 1,030 on the BSE. The stock touched a high of Rs 1,040.70 and a low of Rs 1,030.55 before closing at Rs 1,033.95 on the NSE. Some 1,13,265 shares were traded on the two bourses.
ITC Hotels stock closed at Rs 144.95 on BSE and at Rs 146.15 a share on NSE. Some 42,481 shares of ITC Hotels were traded on the exchanges. ITC chairman YC Deveshwar said, “It’s a win-win situation for all stakeholders. The timing of the amalgamation is particularly appropriate as the travel and tourism industry in India is poised for rapid growth.”
Synergies of the proposed amalgamation will bring strategic benefits to all entities, the company stated in its release.
Apart from enhancing ITC’s earning per share (EPS), shareholders of ITC Hotels and Ansal Hotels will also benefit as they will be able to participate in the larger growth opportunity, given ITC’s diversified portfolio and strong balance sheet, the official communiqué said.
Nearly 80% of the capital employed in the hotels business is already residing in ITC’s balance sheet. The proposed amalgamation will, therefore, facilitate better alignment of investment and income. Besides, it will promote fiscal efficiencies and rationalise operating costs, the company said.
Company officials claim the proposed merger will have only a marginal impact on ITC since it holds a controlling stake in the two subsidiaries.
ITC holds some 72.06% equity capital of ITC Hotels, which manages some 55 hotels spread across the country. Together with ITC Hotels, it holds 90% of the equity share capital of Ansal Hotels.
The proposed merger will be effective from April 1, ’04. The merger will be subject to various regulatory and statutory approvals.