HBI Staff | Hyderabad 
ITC Ltd., a leading Indian conglomerate, is splitting its hotel business into a separate company. This demerger, expected to be finalized in June 2024, is designed to create a more focused hotel entity and potentially unlock greater value for shareholders.
The new hotel company, ITC Hotels, is likely to list on the Bombay Stock Exchange (BSE) within the next 4-6 months.While British American Tobacco (BAT), ITC’s largest shareholder, voted in favor of the demerger, a report from the Economic Times suggests they may have no interest in the new entity.
Following the demerger, BAT, which currently holds a 15.32% stake in ITC Hotels, could potentially sell its shares. This would make them the largest public shareholder in the newly listed company.
Although BAT currently has two representatives on ITC’s board, the demerger document reportedly indicates they will likely not have any representation on the ITC Hotels board. This suggests a potential shift in BAT’s focus away from the hotel sector.
The news of the demerger has been positive for ITC Ltd.’s stock price. Shares rose more than 2.5% on Tuesday, reflecting investor confidence in the move.
The demerger plan, approved in August 2023, involves issuing shares in the new ITC Hotels to existing ITC Ltd.shareholders. Specifically, for every 10 shares held in ITC Ltd., shareholders will receive 1 share of ITC Hotels.
