Indian Hotels Company Approves Scheme of Arrangement to Merge Oriental Hotels Limited, Aims to Simplify Group and Boost Profitability
Indian Hotels Company Ltd (IHCL), a Tata Enterprise, has announced the approval of a scheme of arrangement to amalgamate Oriental Hotels Limited (OHL) into the company. This strategic move is part of IHCL's group simplification strategy, aiming to unlock assets and enhance the financial profile of the organization.The merger involves the addition of seven hotels to IHCL Standalone, including three freehold properties. This transaction is designed as a win-win merger, potentially creating value for both companies and their shareholders.
IHCL and OHL Boards have approved the scheme of arrangement, which is planned to be EPS accretive from year one. The move also aims to simplify the group structure and increase the shareholding in key group companies by deploying capital to unlock asset management opportunities.
Transaction and Portfolio Details
Currently, IHCL and its subsidiaries hold a 37.1% stake in OHL, which is an associate company of IHCL.The merger significantly strengthens IHCL's presence in Southern India.
A breakdown of the hotel portfolio in Southern India before the merger is as follows:
| State | IHCL Consol. Full Service Hotel Keys | OHL Operating Hotel Keys | Total Keys |
|---|---|---|---|
| Tamil Nadu | 187 | 634 | 821 |
| Karnataka | 906 | 96 | 1,002 |
| Kerala | 186 | 95 | 281 |
| Total | 1,279 | 825 | 2,104 |
Post-merger, the transaction is expected to result in over 2,100 total operating keys.
Proposed Transaction Structure
The merger follows an all-stock deal structure, which is noted as tax efficient. The proposed transaction structure involves a share swap where OHL shareholders will receive IHCL shares at a ratio of 1 : 4.68.IHCL plans to complete the merger by FY28. The appointment date for financial consolidation is set for April 1, 2027.
Financial Overview and Growth Matrix
The transaction is anticipated to drive upside through synergies and asset optimization. The company released a growth matrix comparison detailing the financial performance across the relevant years.The financial performance data highlights the operational scope and financial targets:
| Metric | FY23-26 |
|---|---|
| Operating EBITDA | 10.8 |
| Rev Par | 25.0% |
| EBITDA | 26.8% |
| Operating Margin | 30%+ |
This data is provided for both IHCL and OHL.
INDHOTEL Stock Price Movement
As of 10:18 AM, shares of The Indian Hotels Company Limited are edging higher to ₹730.65 in live trading, climbing 0.09% after gaining ₹0.65. The stock is currently navigating an intraday range between the low of ₹728.55 and a high of ₹733.65 on a volume of 240,940 shares.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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