The ITC board has approved the demerger of its hotel business with an indicative timeline of 15 months for the listing of ITC Hotels. ITC Hotels will operate as an independent hospitality focused listed entity.
The rationale of the demerger, as per the company, is to “enable crafting of the next horizon of growth and sustained value creation for shareholders through sharper focus on the business anchored on a differentiated strategy aligned with industry specific market dynamics.”
In accordance with the Share Entitlement Ratio, for every 10 shares held in ITC, ITC shareholders will get 1 share of ITC Hotels. Post the implementation of the Scheme, the shareholders of ITC will directly hold about 60% in the new entity. The balance stake of about 40% will be held by ITC.
The demerger scheme would unlock value of the Hotels Business for existing shareholders through independent market driven valuation of their shares in the resulting company. The Scheme will ensure long-term stability and strategic support and also enable the leveraging of cross synergies between the two companies.
The Demerged undertaking (as defined in the Scheme) comprises the businesses, undertakings, assets, activities, operations and properties of ITC related to the Hotels Business. The turnover of this demerged undertaking for FY23 was at Rs 2573.22 crores representing 3.7% of the total standalone turnover of the company for FY23.
According to the regulatory filing, ITC states that the “Hotels Business has matured over the years and is well poised to chart its own growth path and operate as a separate listed entity in the fast-growing hospitality industry whilst continuing to leverage ITC’s institutional strengths, strong brand equity and goodwill.”
There will be no change in the shareholding pattern of ITC.
