Y.C. Deveshwar on M&A / Acquisitions

Founding Fuel frames ITC's 2023 demerger of its hotels division as a strategic move by chairman Sanjiv Puri to 'kill three birds with one stone': unlock value, restructure capital allocation, and respond to aggressive new entrants in hospitality — notably Reliance Industries, which was actively forging partnerships with Oberoi Hotels and making acquisitions like Mandarin Oriental in New York.

The author notes the announcement surprised the market: ITC's board retained a 40% stake in the new ITC Hotels entity rather than a clean spin-off. The ITC share price fell from Rs 471.35 on the announcement date of July 24 to Rs 442.60 by September 25. Analysts questioned whether ITC was wary of fully cutting the umbilical cord with hotels, and whether a perceived takeover threat drove the decision to keep a controlling stake.

Founding Fuel notes the historical irony: in the early 2000s, ITC under Deveshwar accumulated shares in East India Hotels (the Oberoi Group), reaching 13.69% — just below the 15% open-offer trigger of that era. Deveshwar publicly maintained the stake was a financial investment, not a takeover attempt.

The column recalls that ITC also built a roughly 13% stake in the distressed Hotel Leelaventure between 2008 and 2013, and attempted to increase that stake in 2019 when Leela tried to sell its assets to Brookfield. ITC sought a Sebi stay on the sale, but the Securities Appellate Tribunal rejected its appeal in September 2019 — leaving the matter pending before the NCLT.

Reliance's recent moves are framed by Founding Fuel as altering the three-horse hospitality race among Taj, ITC and Oberoi. Reliance spent about $100 million acquiring a controlling stake in Mandarin Oriental in New York, then announced a tie-up with Oberoi Hotels to co-manage three properties across India and the U.K., including Stoke Park in Buckinghamshire.

Deveshwar's relationship with British American Tobacco (BAT) — the 29% shareholder in ITC — is described as the defining corporate battle of his career. In March 1995 BAT publicly claimed a lack of confidence in ITC chairman Krishan Lal Chugh, alleging financial irregularities in the power-generation business and pressing for a majority stake. In reality, Open reports, BAT wanted cash-rich ITC's funds for itself.