EIH shares soar on report of stake sale despite denials by promoters
23 Aug 2008
Mumbai: Shares of East India Hotels Ltd (EIH), which owns and runs the flagship hospitality brands Oberoi and Trident surged over 17 per cent on talk of the promoters looking to partially their holding to potential buyers who included Mukesh Ambani's Reliance Industries (RIL).
Both companies, EIH and RIL, denied the rumours, but that did not stop the shares from touching the day's high at Rs163.95, spiralling a total of 17.5 per cent.
The Business Standard newspaper quoted sources in investment banking circles while reporting that Reliance Industries, through various associate companies, was a front-runner for picking up a sale of around 26 per cent in EIH.
It reported that the promoters, the Oberoi family, held around 46.37 per cent of the company, and may part with a minority stake and issue fresh shares on the preferential basis to the strategic investor. The report quoted chairman and chief executive officer of EIH P R S Oberoi as having confirmed that the group was in talks with several investors, though nothing was finalised yet.
East India Hotels chairman and chief executive P R S Oberoi called the reports "baseless, untrue and mischievous" while denying his quotations in the newpaper report. RIL spokespersons denied the development altogether.
Other share holders in EIH include Anil Ambani's Sonata Investments Ltd which owns 1.55 per cent, Russell Credit Ltd which has 14.92 per cent, and LIC which has 6.53 per cent.
HSBC, General Insurance Corp (GIC) and New India Assurance Company are known to hold below two per cent each in the company.
EIH runs the third largest hotel chain in India, after Tata group's Indian Hotels and ITC Welcome group.
In a clarification to the Bombay Stock Exchange (BSE), the company said ''With reference to the news item appearing in a leading financial daily titled 'Oberois may offload EIH stake to strategic investor', EIH Ltd has clarified to BSE that the facts contained in the article are absolutely baseless, untrue and mischievous.''