The battle for EIH Ltd, India’s second-biggest premium hotel chain, seems to be intensifying.
The company on Friday informed the Bombay Stock Exchange (BSE) that its board had approved a rights issue of 178.61 million shares at Rs65 each, which is a 30.5% discount of Friday’s closing price of Rs93.5.
The rights issue, which is an offer to existing shareholders to purchase additional new shares in a company, would make both Reliance Industries (RIL) and ITC —significant shareholders in the company — dig in heels as both would like to maintain their present stakes, said S P Tulsian, an independent stock market analyst.
RIL has a 14.8% stake in EIH, while ITC has 14.96% — just shy of the 15% mark, which triggers an open offer according to the Securities and Exchange Board of India norms.
The Oberoi family holds 32.31% stake.
“It is a very effective price,” said Tulsian. “Initially there was a bit of confusion whether it would be priced higher but with this aggressive pricing, retail investors will also find it very attractive,” he said.
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