ITC denies reports of hotels merger with EIH
29 September 2010
ITC, India's top cigarette maker that also runs the Welcom Group, has called reports of demerging its hotel business completely baseless. ''The news of us combining our hotel business with luxury Oberoi and Trident hotel chain operator EIH is untrue,'' the company said.
The Financial Express had earlier reported that the two companies were planning to combine their hotel businesses. This plan would result in a three-way venture between the two firms and India's top listed conglomerate, Reliance Industries, which in August bought a 14.1 per cent stake in EIH for $217.5 million, the newspaper said.
EIH manages 32 hotels globally and has been looking to expand in overseas locations such as London, New York and Paris.
Analysts had said the deal with Reliance was likely to thwart EIH's larger rival ITC, which holds a 14.98-per cent stake in EIH, from raising its stake in the hotel chain. ITC has reportedly been looking to raise its stake in EIH, but its chairman has previously ruled out plans to make an open offer.
The financial daily had reported (apparently without basis) that ITC and EIH had drawn up a blueprint to combine and emerge as the country's largest hotel chain by revenues. The ITC Group would demerge its hotel business, which would then form a partnership with the EIH group. The combined entity would have a much larger revenue base of Rs1,948 crore, outstripping the Tata group's hospitality company Indian Hotels, it said.
The paper cited unnamed sources as saying talks between the parties are at a preliminary stage, but would gather steam shortly. An Oberoi group spokesperson also denied knowledge of any such plans.