Tata Group's Indian Hotels Company (IHCL), which operates the popular Taj hotel brand, has announced the merger of Oriental Hotels with IHCL in an all-stock transaction. Oriental Hotels is an associate company of IHCL, with a portfolio of seven hotels with 825 rooms.

IHCL and its subsidiary currently hold a little over 37% stake in the company. Following the merger, which is expected to be completed in the second half of FY28, 7 hotels will be added to IHCL’s standalone portfolio, including 3 freehold properties.

What this means for shareholders? The share swap ratio for the merger has been fixed at 25:117 for one of the biggest mergers in India’s hospitality industry announced this year.

This means that Oriental Hotels shareholders will receive 25 shares of IHCL for every 117 shares held in Oriental Hotels as on the record date, subject to statutory approvals and clearances. The record date to determine the eligibility of Oriental Hotels shareholders who will receive IHCL shares after the merger will be announced later.

Calling it a ‘win-win merger’, IHCL said the restructuring will result in an enhanced financial profile, with an increase in revenue and profitability. It will also be an EPS accretive transaction from the first year, strengthening IHCL’s presence across Southern India.

After the merger, IHCL’s total operating keys will rise above 2,100 in South India. Why is Oriental Hotels merging with IHCL?

IHCL said the companies are engaged in similar businesses and have complementary portfolios, with Oriental Hotels having a significant presence in Tamil Nadu, Kerala and Karnataka. The merger will create synergies amongst the businesses and will facilitate a wider and stronger base for future growth, it said.

By getting merged into IHCL, Oriental Hotels will become part of a larger entity to have access to the financial resources, management experience and expertise, it said, adding that this will facilitate operational and cost synergies. “The merger will drive long-term value creation by leveraging IHCL’s strong balance sheet to support strategic investments, including inventory expansion and product enhancements further strengthening the premium positioning of the portfolio,” the executive said.

Oriental Hotels MD & CEO Pramod Ranjan meanwhile said that the merger will create significant value for Oriental Hotels shareholders, enabling them to now participate directly in IHCL’s growth journey. “IHCL, India’s largest hospitality ecosystem, has built a resilient and diversified business model anchored by a strong brandscape that caters to the country’s diverse travel needs.