Tata Sons said that the transaction was aimed at restructuring the group’s investment portfolio.
Tata Sons will buy seven per cent stake in Indian Hotels from three Tata Trusts which will worth over Rs 1,000 crore. Tata Sons is already a major shareholder of the company with holding nearly 30 per cent stake.
A Times of India report said that Tata Sons is planning to buy Indian Hotels’ shares on or after March 13 from Sir Dorabji Tata Trust, Lady Tata Memorial Trust and Sir Ratan Tata Trust. Tata Sons will buy the stake from the trusts at Indian Hotels’ stock’s prevailing price on the date of acquisition. However, the report added that the price will not be higher than 25 percent of 60-day average trading price of Rs 135 apiece. As of Tuesday’s closing price, 7 percent stake comes to Rs 1,060 crore.
Indian Hotels was incorporated by the founder of the Tata group, Jamsetji Tata, which opened its first property, the Taj Mahal Palace, in Bombay, in 1903. Sir Dorabji Tata Trust was established after Jamsetji’s elder son, Lady Memorial Trust after Dorabji’s wife and Sir Ratan Tata Trust after Dorabji’s younger brother.
Tata Sons said that the transaction was aimed at restructuring the group’s investment portfolio. Once it is done, it will mark the exit of these Trusts from the Indian Hotels.
It will increase the shareholdings of Tata Sons in Indian Hotels to 37 per cent which is expected to help the company in future battles, said the report. The company had found itself in a spot due to its low shareholding in operating entities and it had to depend on the support of institutional investors during last year’s boardroom fight between Ratan Tata and Cyrus Mistry.
