Indian Hotels Company Ltd. shares fell over 3% as the market opened on Monday, while Oriental Hotels Ltd. shares jumped around 6% after the two companies announced a merger.
Shares of Indian Hotels opened at Rs 729.55 apiece, against its previous close at Rs 730 on NSE, while Oriental Hotels' stock opened at Rs 142.98 apiece on NSE, up from its previous close at Rs 138.67. Indian Hotels fell further to trade over 3% lower, before surging to trade flat. Oriental Hotels gained to trade 6% higher before paring some gains.
Currently, Indian Hotels stock is at Rs 730.7 apiece, while Oriental Hotels is trading at Rs 142.72 per share on NSE.
Investors are tracking the all-stock deal, the proposed share-swap ratio and the impact of Oriental Hotels' portfolio on IHCL's growth and earnings.
The boards of IHCL and Oriental Hotels have approved a Scheme of Arrangement under which Oriental Hotels will be merged into IHCL. The deal is subject to NCLT, shareholder, creditor and other regulatory approvals.
IHCL currently holds 37.05% of Oriental Hotels directly and indirectly through its subsidiaries, according to the scheme disclosure. The transaction will be treated as a related-party transaction, but the companies said the consideration will be discharged on an arm's-length basis, based on a joint valuation report and fairness opinion.
25 IHCL Shares For 117 OHL Shares
Under the proposed share swap, Oriental Hotels shareholders will receive 25 IHCL shares for every 117 OHL shares held. The deal is entirely stock-based and is expected to result in about 2.32 crore net IHCL shares being issued, implying around 1.6% dilution.
The merger is expected to be completed by FY28, while April 1, 2027 has been proposed as the appointed date for financial consolidation.
IHCL CFO Ankur Dalwani said the merger would simplify the group's holding structure and increase IHCL's direct ownership across several entities. He said this would help “streamline governance, optimise overheads” and improve operational efficiency.
Also Read: Indian Hotels Q1 Results: Profit Jumps 27% As Margins Improve; Revenue Crosses Rs 2,300 Crore
7 Hotels, 825 Rooms To Join IHCL
Oriental Hotels operates seven hotels with 825 rooms across southern India. Its portfolio includes Taj Coromandel in Chennai, Taj Fisherman's Cove, Taj Malabar in Kochi, Gateway Madurai, Gateway Coonoor, Vivanta Mangalore and Vivanta Coimbatore.
The merger is expected to strengthen IHCL's presence across Tamil Nadu, Karnataka and Kerala, taking the combined operating portfolio in these states to more than 2,100 keys.
IHCL Managing Director and CEO Puneet Chhatwal said the transaction is part of the company's Accelerate 2030 strategy and aims to simplify the group structure while unlocking the potential of Oriental Hotels' portfolio.
“In line with our Accelerate 2030 strategy of creating value, simplifying the group's holding structure and unlocking the full potential of OHL portfolio including iconic assets like Taj Coromandel, Chennai, Taj Fisherman's Cove Resort & Spa, Chennai and Taj Malabar Resort & Spa, Cochin, the Boards of IHCL and OHL have today approved this merger.” He added, “The merger will drive long-term value creation by leveraging IHCL's strong balance sheet to support strategic investments, including inventory expansion and product enhancements further strengthening the premium positioning of the portfolio.”
For Oriental Hotels shareholders, the merger means participation in IHCL's consolidated hospitality business through the shares issued under the scheme. Oriental Hotels CEO Pramod Ranjan said the transaction would “create significant value for OHL shareholders” by allowing them to participate directly in IHCL's growth journey. The scheme says the merger will also create operational and cost synergies, reduce duplication and simplify management and administrative structures.
Also Read: Upcoming IPO: Pride Hotels Plans To Raise Rs 1,000 Crore Via Public Issue By December
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