Kolkata: The Oberoi family has dropped plans to sell a substantial stake in EIH Ltd—the firm that runs hotels under Oberoi and Trident brands—to Analjit Singh, founder and chairman of conglomerate Max India Ltd.
“We had some preliminary discussions with Mr Analjit Singh,” EIH chairman P.R.S. Oberoi said in an emailed statement to Mint. “No further discussions are envisaged...”
Singh wasn’t immediately available for comment.
On 15 October, The Economic Times newspaper had reported and Oberoi had confirmed that he was exploring the possibility of bringing in Singh as a co-promoter in EIH.
Starting in 2000, cigarette maker ITC Ltd, which also has interests in consumer goods, paper and hotels, has slowly built up a 14.98% stake in EIH.
ITC’s chairman Y.C. Deveshwar had said last year at his company’s annual general meeting that ITC was willing to join forces with EIH, but ruled out making a hostile bid for it.
Deveshwar is a director of HT Media Ltd, which publishes Mint.
EIH’s promoters own 46.43% in the firm, and claim they aren’t worried about ITC amassing a substantial stake in their company.
Yet, the Oberois continued to explore options for tightening their control over the company. One of them was to sell stake to Singh.
Among other options that were considered was a merger between EIH and EIH Associated Hotels Ltd, a joint venture (JV) between the Oberoi family and the Rajan Raheja Group, which has interests in construction, media, industrial batteries, cement and petrochemicals.
EIH owns 36.1% in EIH Associated Hotels, and the Oberoi family 3% more through investment arms. The Rajan Raheja Group holds a 36% stake.
Its merger with EIH would have brought in Raheja as a co-promoter and substantially shored up the combined promoter holding in the firm.
But even that plan might have been shelved. “There are no further developments on the merger of EIH and EIH Associated Hotels,” Oberoi said.
Meanwhile, EIH announced on Thursday that it had reached an agreement to acquire for $45 million (Rs204 crore) its partner’s 45.85% stake in one of its JVs, EIH Holdings Ltd British Virgin Islands.
The stake was held by Amex Investment Ltd, Hong Kong—a firm controlled by Netherlands-based Rattan Chadha.
EIH Holdings owns equity interest in four hotels: two in Indonesia and one each in Egypt and Mauritius. EIH manages all the four properties.
In addition, EIH Holdings has management contract of two properties in Egypt, including a cruise ship that plies the Nile, and that of four others currently under construction in Marrakech, Mauritius, Dubai and Greece.
The JV company was formed in 1996 to manage and invest in hotels outside India, Oberoi said.
“Amex wanted an exit, and EIH decided to buy its interest,” Oberoi added. “The acquisition price was mutually negotiated and supported by an independent valuation.”
Amex’s stake will be acquired through EIH’s wholly owned subsidiary EIH International Ltd, another firm incorporated in the British Virgin Islands.
On conclusion of the deal, EIH International will gain 100% ownership of EIH Holdings, which till now was under the management control of Amex. The acquisition of shares will be funded by EIH’s internal resources.
Though the group has now decided to focus more on managing than on owning hotels, EIH will continue to make such strategic investments, Oberoi said.
Going forward, EIH will be acquiring small equity stakes in at least two properties that it will manage, one in Marrakech and the other in Mauritius, which are currently under construction, according to Oberoi.
EIH’s shares closed 1% higher from Wednesday at Rs125.80 apiece on the Bombay Stock Exchange, while the bourse’s benchmark Sensex index fell 0.6% to 16,987.53 points.