RIL Arm Buys Analjit Singh’s Stake in East India Hotels

Mukesh Ambani's Reliance's holding in hotel chain climbs to 18.52% from 14.80%; ITC continues to hold 14.98% stake

An investment subsidiary of Reliance Industries has purchased the stakes held by two investment companies owned by Analjit Singh, the promoter of Max India, in East India Hotels, enabling India's largest private sector company to overtake ITC as the largest minority shareholder in the premier hotel chain. 

Analjit Singh was at one point believed to be playing the role of a white knight, as EIH owner PRS Oberoi sought to strengthen his defences against ITC, a cigarette maker that owns a string of hotels that was believed to be coveting the hotel chain, widely known as the Oberoi Group. In September 2010, RIL, controlled by billionaire Mukesh Ambani, bought 14.8% in a friendly transaction. 
The investment subsidiary Reliance Industries Investment and Holdings increased its stake in the hotel chain from 14.80% to 18.52% by way of two transactions. ITC, which has asserted that its investment is financial, continues to hold 14.98%. 
Both investors — ITC and RIL - till recently were careful to keep their stakes below 15%, because of the takeover code. The new takeover code has enabled RIL to increase its stake above 15%, as the trigger for an open offer is now at 25% from the earlier level of 15%. 
EIH, in a filing to the Bombay Stock Exchange, said the shares were bought from the open market through bulk deals on Friday. 
According to the filing, RIL bought nearly 2.1 crore shares for . 90 a piece from Gaylord Impex and Pivet Finance, valuing the deal at . 191.83 crore. Gaylord Impex sold 88.19 lakh shares of the company, while Pivet Finances offloaded 1.24 crore shares. 
In September 2010, RIL bought 14.12% of EIH for . 1,021 crore. As of December 2011, the promoters of the company, the Oberoi family, hold 34.96% stake. The other major stake holders in EIH, which operates hotels and resorts under the Oberoi and Trident brands, are LIC of India and New India Assurance, who hold 6.24% and 2.06% stake, respectively. 
Shares of EIH, ended 2.05% higher at . 89.70 on Friday, still lower than the price at which Ambani acquired the lot from Analjit Singh, indicating the group's confidence in the hotel chain. 
On November 1, 2011, Nita Ambani, wife of the RIL chairman, and his close confidante Manoj Modi joined the board of EIH.