India's ITC gets shareholder nod for hotels business carve-out (updated)

Indian Hotels

06/06/2024 11:14

(Adds voting details, shares at close, background throughout)
       BENGALURU, June 6 (Reuters) - ITC  ITC.NS  shareholders
approved the Indian consumer goods maker's plan to carve-out its
hotels business on Thursday, in line with the recommendation of
key proxy advisors. 
    About 99.6% of the tobacco-to-soap firm's minority
shareholders voted in favour of the move, exceeding the
regulatory requirement of a three-fourth majority. 
    The company's shares closed 1.2% higher after the outcome of
the vote. They were up 1% earlier in the session. 
    As per media reports, proxy advisory firms Stakeholders
Empowerment Services (SES) and InGovern Research Services last
month asked shareholders to support the demerger proposal, while
Institutional Investor Advisory Services (IiAS) opposed the
move.
    "ITC must provide greater clarity with respect to the size
of the synergies it expects to get by maintaining the 40% equity
in the hotels business," IiAS said a voting advisory note,
referring to the stake that the company will hold in ITC Hotels,
the newly formed entity. ITC shareholders will own the remaining
stake. 
    The company, known for its Goldflake brand of cigarettes,
announced the demerger plan in July last year and later said
that the new entity would be tentatively listed in 15 months.  
    ITC Hotels will compete as an independent entity with rivals
such as Tata-owned Indian Hotels Company  IHTL.NS , which
operates Taj Hotels, and EIH Associated Hotels  EIHA.NS , which
manages the Oberoi brand of hotels.
    The hotels business contributed 4% to ITC's fiscal year 2024
revenue, while its mainstay consumer staples business made up
71% of the topline. 

 (Reporting by Hritam Mukherjee in Bengaluru; Editing by Sonia
Cheema)
 ((Hritam.Mukherjee@thomsonreuters.com; X: @MukherjeeHritam;))