Mumbai: A day after acquiring 14.12% of EIH Ltd, Reliance Industries Ltd (RIL) increased its stake in the hospitality company to 14.80%, inching closer to the 15% threshold limit for making an open offer under the existing takeover code.
In a filing to the Bombay Stock Exchange on Wednesday, Reliance Industrial Investment and Holding Pvt. Ltd, an RIL unit, said it had bought 2.68 million shares in an off-market trade on Tuesday, a day after it acquired 55.47 million shares of the same company.
Under the country’s takeover regulations, a company acquiring 15% in another firm has to make a mandatory offer for at least 20% more of its shares.
While acquiring the stake, RIL had said “it had full faith in and would support the management of EIH”.
P.R.S. Oberoi, EIH chairman, had also said that the company was happy to encourage RIL’s investment.
Analysts said RIL’s hiking of its stake in EIH, which operates hotels in India under the Oberoi and Trident brands, may not have any acquisitive motive as it was seen as wanting to remain a long-term investor.
RIL may have bought the stock at a cheaper price than the Rs184 per share it paid for the original 14.12%, said an analyst with a domestic brokerage, who did not want to be identified.
After touching an intraday high of around Rs180 on Monday, EIH shares closed Tuesday on the BSE at Rs139.95 apiece.
Mukesh Ambani’s RIL was brought in by EIH as a white knight to ward off a potential takeover threat from ITC Ltd.
“ITC currently has a 14.98% stake and it is very close to the point from where it will be eligible to make an open offer in EIH. RIL might have bought the extra shares to make it more difficult for ITC,” Elara Securities analyst Himani Singh told PTI .