Tata Group-owned Indian Hotels Company Ltd (IHCL) announced on Monday that it will merge with Oriental Hotels Ltd (OHL) in an all-stock deal. The boards of both companies approved the merger. This will bring seven hotels and 825 rooms directly under IHCL's ownership. The deal aims for completion in the second half of fiscal year 2028, pending regulatory approvals.
Key Details
Under the merger terms, OHL shareholders will receive 25 IHCL shares for every 117 OHL shares. IHCL currently owns 37.1% of OHL and will issue about 23.2 million new shares. This will result in a dilution of around 1.6%. Prashant Biyani, vice-president at Elara Capital, noted that this merger creates a potential arbitrage opportunity for investors. He suggested a 13% upside for OHL shares based on recent trading prices.
Background
The merger is part of IHCL's 'Accelerate 2030' strategy. This strategy aims to simplify its corporate structure and improve operational efficiency. Ankur Dalwani, CFO of IHCL, stated that the merger would streamline governance and reduce overhead costs. This will allow the company to use its strong balance sheet for future investments. IHCL's portfolio includes several key assets in the UK, Maldives, and Sri Lanka, which are expected to benefit from this merger.
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The merger could affect the hospitality sector, particularly shares of both IHCL and OHL. Investors may view OHL as an indirect play on IHCL's growth strategy. This could drive demand for OHL shares ahead of the merger's completion.
Watch for updates on regulatory approvals and the finalization of the merger, expected in the second half of FY2028.
Based on reporting by: livemint.com