This strategic restructuring ensures that 100% of the economic benefits will remain with the shareholders. Credit: T. Schneider / Shutterstock.

The Competition Commission of India (CCI) has approved the demerger of the hotel business of Indian conglomerate company ITC into a separate entity named ‘ITC Hotels’.

According to a combination notice released by the fair trade regulator on 28 May, the completion of the demerger will result in ITC Hotels’ shares getting listed.

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The new arrangement will allow ITC to retain a 40% interest in the new entity while the remaining 60% stake will be owned directly by ITC’s shareholders, reflecting their current stakes in ITC.

The demerger, which was approved by the ITC board in August 2023, will allow its shareholders to receive one share in the new hotel entity for every ten shares they hold in ITC.

This strategic restructuring ensures that 100% of the economic benefits will remain with the shareholders, with a 40% indirect and 60% direct interest, the CCI noted.  

The CCI said: “It is submitted that the proposed combination is only an internal restructuring exercise which will not result in any change in market dynamics. Therefore, the proposed combination does not raise competition concerns in any plausible market, and the precise definition of the relevant market may be left open.” 

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The announcement comes a day after the proposed merger and separate listing of ITC’s hotels business received mixed reactions from three proxy advisory companies.  

Institutional Investor Advisory Services has advised shareholders to vote against the proposal while Stakeholders Empowerment Services and InGovern Research Services have expressed support for the demerger.

ITC shareholders are now poised to convene on 6 June to deliberate and decide on the demerger proposal.

Established in 1975, ITC Hotels is an Indian luxury hotel chain with more than 115 multi-branded hotels in more than 80 destinations.

The brand portfolio includes Mementos, Welcomhotel, ITC Hotels, Storii, Fortune Hotels, and WelcomHeritage, each offering distinct experiences.