ITC Board Grants In-principle Approval For Hotels Business Demerger

ITC's board has given its preliminary approval for the demerger of its hotels business, creating a wholly-owned subsidiary named ITC Hotels. The board's decision was announced in a regulatory filing, stating that the demerger will result in ITC holding around 40 per cent stake in the new entity, while the remaining 60 per cent will be directly owned by the company's shareholders in proportion to their existing shareholding.

The scheme of arrangement for the demerger will be presented for approval at the next ITC Board meeting scheduled for 14 August 2023.

ITC Hotels group currently boasts a portfolio of more than 120 hotels with over 11,600 keys across 70+ locations. The ITC board recognised that the Hotels Business has matured over time and is now well-positioned to pursue its own growth path as a separate entity in the rapidly expanding hospitality industry. The demerger will allow the Hotels Business to focus on its operations with an optimal capital structure while continuing to leverage ITC's institutional strengths, brand equity, and goodwill.

According to ITC, the demerger will unlock value for the company's shareholders by granting them a direct stake in the new entity and an independent market-driven valuation.

ITC's Chairman, Sanjiv Puri, expressed that the creation of a hospitality-focused entity will open up new avenues for growth and value creation in the Indian hospitality industry. Both ITC and the new entity are expected to benefit from institutional synergies even after the reorganisation.

Notably, ITC's stock price has experienced a significant rally this year, with a jump of over 42 per cent in 2023 and more than 57 per cent in the past year. As of 2:35 pm, the ITC share price was trading at Rs 474.95 apiece on the BSE, representing a 3.04 per cent decrease.