ITC board approves demerger of hotels business, share price drops 4%

economictimes.indiatimes.com:

ITC on Monday announced that its board has approved the demerger of its hotels business. The move is aimed at unlocking value for 30 lakh shareholders of the multibagger stock which has been the best performing Nifty counter in the last one year.

«After due consideration, the Board accorded its in-principle approval to the demerger of Hotels Business under a scheme of arrangement, with the Company holding a stake of about 40% in the new entity and the balance shareholding of about 60% to be held directly by the Company’s shareholders proportionate to their shareholding in the Company,» ITC said. The scheme of arrangement shall be placed for approval of the board at its next meeting to be convened on 14th August 2023, it said.

At a board meeting, the directors evaluated and discussed various alternative structures for the hotel business towards crafting the next horizon of growth as also enhancing value creation for all stakeholders. The board noted that the company’s hotels business has matured over the years and is well poised to chart its own growth path as a separate entity in the fastgrowing hospitality industry with a sharper focus on the business and an optimal capital structure, whilst continuing to leverage ITC’s institutional strengths, brand equity and goodwill.

The proposed reorganisation would ensure the continued interest of the company in the hospitality business, provide long-term stability and strategic support to the new entity in its pursuit of accelerating growth and sustained value creation as also enable leveraging of cross synergies between the Company and the new entity. The demerger will help the new entity in attracting appropriate investors and strategic partners/ collaborations whose investment