EIH Associated Hotels gained 9.98% or Rs 20.95 to close at Rs 230.85. It touched a 52-week high of Rs 230.85. There were pending buy orders of 43,187 shares, with no sellers available.
Why the run up?
On August 30, 2010, Energy major Reliance Industries controlled by billionaire Mukesh Ambani, announced its foray into the hospitality sector by acquiring a 14.12% in EIH for a total cost of Rs 1021 crore. The stake buy worked out to Rs 184 per share. The acquisition at Rs 184 per share represented almost a 20% premium to its price of Rs 151 on the day. EIH holds 75% controlling stake in EIH Associated Hotels.
On September 01, 2010 , Reliance, bought an additional 0.68% in EIH Ltd, raising its holding to 14.8% in the hotel chain.
Reliance's 14.8% stake in EIH, just shy of the 15% level that triggers a mandatory open offer to buy an additional 20%, could mean the company is not keen to take management control of the hotel chain.
ITC, which holds 14.98% stake in EIH, reiterated that it would not make a hostile bid for EIH.
Analajit Singh, Chairman of Max India, who also holds under 5% stake in EIH, was also interested in hiking his stake in the company. However, talks failed over differences in valuations.
