ITC demerger news: BAT unlikely to have board representation in hotel biz, claims report

ITC Ltd, which is soon to demerge its hotel business, is unlikely to have any representation from its largest shareholder British American Tobacco (BAT), said a report from Economic Times, which cited the demerger document sent to the shareholders of the company.

ITC is scheduled to host a meeting of the ordinary shareholders of the company on Thursday, June 6 at 10.30 am IST for the proposed demerger of ITC Hotels. The demerger is expected to unlock value through the creation of a pure play hotels entity, which would have a stronger business focus aligned to the specific market dynamics in India.

The report from the business daily, citing an industry executive aware of the development, said that BAT has no interest in the hotel business of the company may sell its stake in the newly listed entity, which is likely to make its Dalal Street debut in next 4-6 months period.

BAT is the second largest shareholder in the ITC Hotels, owning 15.32 per cent stake in the company, listed under foreign direct investment. The parent company ITC Ltd is the largest shareholder in the hotel entity, which holds 39.93 per cent stake as the promoter of the company. Post listing of ITC Hotels, BAT will be the largest public shareholding entity of the company.

BAT had voted in the favour of the demerged of the hotel business of the company and it currently has two representatives on the board of ITC- Sunil Panray and Atul Singh, said ET. In March 2023, BAT has offloaded 3.5 per cent stake in ITC for Rs 16,690 crore in a block to various institutional investors to cut its stake in the company to 25.51 per cent.

Shares of ITC Ltd rose more than 2.5 per cent during the trading session on Tuesday, commanding a total market capitalization of around Rs 5.6 lakh crore. The scrip had settled at Rs 434.60 in the previous trading session on Monday.

To recall, ITC approved the Scheme of Arrangement between ITC Ltd and ITC Hotels in August, 2023. The scheme suggested the issuance of equity shares by the resultant entity to the shareholders of the demerged counterpart. Specifically, for every 10 shares held in ITC Ltd, shareholders would be entitled to receive 1 share of ITC Hotels.