BENGALURU (Reuters) -ITC shareholders approved the Indian consumer goods maker’s plan to carve-out its hotels business on Thursday, in line with the recommendation of key proxy advisors.
About 99.6% of the tobacco-to-soap firm’s minority shareholders voted in favour of the move, exceeding the regulatory requirement of a three-fourth majority.
The company’s shares closed 1.2% higher after the outcome of the vote. They were up 1% earlier in the session.
As per media reports, proxy advisory firms Stakeholders Empowerment Services (SES) and InGovern Research Services last month asked shareholders to support the demerger proposal, while Institutional Investor Advisory Services (IiAS) opposed the move.
“ITC must provide greater clarity with respect to the size of the synergies it expects to get by maintaining the 40% equity in the hotels business,” IiAS said a voting advisory note, referring to the stake that the company will hold in ITC Hotels, the newly formed entity. ITC shareholders will own the remaining stake.
The company, known for its Goldflake brand of cigarettes, announced the demerger plan in July last year and later said that the new entity would be tentatively listed in 15 months.
ITC Hotels will compete as an independent entity with rivals such as Tata-owned Indian Hotels Company, which operates Taj Hotels, and EIH Associated Hotels, which manages the Oberoi brand of hotels.
The hotels business contributed 4% to ITC’s fiscal year 2024 revenue, while its mainstay consumer staples business made up 71% of the topline.
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Sonia Cheema)
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