Fast-moving consumer goods giant ITC Ltd. announced that January 1, 2025, would be the effective date for the demerger of its hotels business into ITC Hotels Ltd. The record date has been set as 6 January 2025, marking a key milestone in the long-planned demerger process.
The National Company Law Tribunal (NCLT), Kolkata bench, gave its approval for the demerger earlier this year. Following this, ITC shareholders overwhelmingly supported the move, with 99.6% voting in favour of the proposal, despite recommendations to oppose it by the proxy advisory firm Institutional Investor Advisory Services (IiAS).
As per the scheme of arrangement, ITC Ltd. will retain a 40% stake in ITC Hotels Ltd., while ITC shareholders will receive 60% of the company’s shares in proportion to their existing holdings. For every 10 shares held in ITC Ltd., shareholders will receive one share in ITC Hotels Ltd.
The equity structure of the new entity, ITC Hotels Ltd., will include 207.84 crore shares of ₹1 face value, translating to an equity capital of ₹207.84 crore.
ITC stated that the decision to spin off its hotel business aligns with the company’s strategy to unlock shareholder value and enable ITC Hotels to grow as a standalone entity. The company highlighted that its hotel business has matured over the years and is well-positioned to chart its independent growth trajectory in India’s rapidly expanding hospitality sector.
The demerger process began in August 2023, with ITC Ltd. announcing its intent to separate its hotel business. The move aimed to optimise the capital structure and enable the hotel business to focus on its core growth strategies without being overshadowed by ITC’s larger FMCG operations.
As of 2:17 pm on December 18, 2024, ITC Ltd.’s share price was trading higher by 0.50% at ₹471.90.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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