Shares of hospitality firm EIH Ltd, which operates hotels under the Oberoi and Trident brands, surged by over 9 per cent in morning trade on the BSE today after SEBI raised the ownership trigger for mandatory takeover offer in a company to 25 per cent from 15 per cent now.
The announcement was made after the market close yesterday.
Shares of the company zoomed 9.25 per cent to touch a month’s high of Rs 93.40 on the BSE. On the volumes front, 5.74 lakh shares of the company were traded in the morning on the BSE.
SEBI has mandated that an entity buying a 25 per cent stake in a listed firm will have to make an offer to buy an additional 26 per cent from public shareholders.
The new norms mark an increase in the open offer size for public shareholders from 20 per cent currently, while the trigger for such offer has also been raised from 15 per cent in the existing regulations.
According to market experts, the stock saw brisk buying on anticipation that ITC and Reliance will now compete to increase their stake in the company.
At present, ITC holds a 14.98 per cent stake in the company, while Reliance Industries Investment And Holding Pvt Ltd has a 14.80 per cent stake in EIH.
The promoter holds around 34.4 per cent in EIH.
Commenting on the new takeover norms, SMC Global Securities Strategist & Head of Research, Mr Jagannadham Thunuguntla, said, “If any acquirer acquires at least a 25 per cent stake in a company, he has to come out with a minimum 26 per cent open offer. So, this will result in making an acquirer ending up with a 51 per cent stake.
“That will make the acquirer having the controlling stake in the target company. This is probably the most important takeaway of these revisions, as this will result in change of guard and ownership in many Indian companies.”
He further noted that in the past, it was not easy for an acquirer to get controlling stake in a target company in India. However, with this change, it will be possible to get controlling stake for an acquirer.
Shares of ITC were also trading higher by 1.75 per cent at Rs 209.65 on the BSE.