Competition Watchdog approves Demerger of ITC’s Hotel Business into a Separate Entity
India’s watchdog, the Competition Commission of India (CCI) has approved the demerger of ITC’s hotel business into a separate entity.
To list the shares of ITC Hotels separately on the Stock Exchange, this approval shows a way. ITC Hotel has been directed by NCLAT (National Company Law Tribunal) to summon a shareholder’s meeting on 6th June 2024 to give a thought and approve the proposal for the hotel business’ demerger.
The demerger of the hotel business was approved by the ITC board on Aug 14, 2023, with a given timeline of listing of new entity in approximately 15 months. The shareholders of ITC are about to hold 60% direct stakes in ITC Hotels (which is in proportion to their stake in ITC) and the rest 40% holding will continue with ITC.
In this demerger scheme, no payable of cash consideration will take place.
Mixed opinions came from proxy advisory firms on the proposed demerger and separate listing of the hotel business. The big proxy advisory firms have their votes in favour and against of this demerger proposal. InGovern and Stakeholders Empowerment Services (SES) encourage shareholders to vote in favour of the resolution, while Institutional Investor Advisory Services (IiAS) advises against it.
During Q4 FY 24, the Segment Revenue of the ITC hotel business reached at Rs.2989.50 crore and the Segment EBITDA was Rs.1049.88 crore.
