Lemon Tree Hotels Limited's board of directors has approved a comprehensive composite scheme of arrangement designed to restructure the company's business operations and attract strategic investment. The scheme, approved on January 9, 2026, involves multiple subsidiaries and aims to create distinct platforms for hotel ownership and management operations.

Composite Scheme Structure

The approved scheme encompasses three main components: two amalgamations and one demerger. Under Amalgamation 1, two wholly-owned subsidiaries - Carnation Hotels Private Limited and Hamstede Living Private Limited - will merge with the parent company without any share issuance or cash consideration.

Amalgamation 2 involves four wholly-owned subsidiaries merging with Fleur Hotels Limited, the company's material subsidiary. The share exchange ratios for this amalgamation are structured as follows:

Demerger of Hotel Assets

The scheme includes demerger of identified hotel properties and hospitality asset platform to Fleur Hotels Limited. The demerged undertaking comprises 11 operating hotels, 1 under-construction hotel, and investment in Arum Hotels Private Limited. Shareholders will receive 20 fully paid-up equity shares of Fleur Hotels for every 311 equity shares of the company.

Strategic Investment and Agreements

The board has approved execution of multiple strategic agreements with Coastal Cedar Investments B.V., a Netherlands-based entity. Under the Shareholders' Agreement, the investor will acquire APG Strategic Real Estate Pool N.V.'s entire 41.09% stake in Fleur Hotels and gain rights to invest up to ₹9,60,00,00,000.00 in growth capital.

Key provisions of the strategic partnership include:

• Board composition of up to 10 directors for Fleur Hotels
• Up to 3 directors each from the company and investor
• Balance as independent directors
• Reserved matters requiring affirmative consent from both parties
• Exclusive rights for Fleur Hotels to own, lease and develop hospitality assets globally

Financial Performance of Entities

The entities involved in the scheme demonstrate varied financial performance as of March 31, 2025:

Regulatory Approvals and Timeline

The scheme's effectiveness is conditional upon several regulatory approvals, including no-objection letters from SEBI and stock exchanges, approval from requisite majority of shareholders and creditors, and sanction from the National Company Law Tribunal. The appointed date for the scheme is April 1, 2026.

The restructuring aims to achieve operational focus, greater flexibility for capital deployment, and clearer alignment of business objectives. Following implementation, Fleur Hotels will seek separate listing, enabling transparent price discovery and market-driven valuation of the asset-heavy business while the parent company focuses on asset-light hotel management and brand operations.

Source: Exclusive

Lemon Tree Hotels shares came into focus following the company's denial of media reports suggesting Warburg Pincus may acquire a meaningful stake in the mid-range hotel chain. The reports, which surfaced during market hours on January 7, triggered a 5% surge in the stock price before the company issued its clarification.

Company Issues Clarification on Warburg Pincus Reports

Lemon Tree Hotels has categorically denied the existence of any negotiations or agreements with Warburg Pincus. The company stated that no negotiations, discussions, agreements, or proposals—whether ongoing or approved—are currently in place. Additionally, no preferential allotment of shares to Warburg Pincus is under consideration.

The company emphasized that while it periodically evaluates various strategic and financial options in the ordinary course of business, any such discussions remain preliminary and non-binding until requisite approvals are obtained and definitive agreements are executed.

Media Reports on Potential Transaction Structure

According to CNBC-TV18 reports, Warburg Pincus was likely to acquire APG Strategic RE Pool's stake in Lemon Tree Hotels in the first tranche. APG Strategic RE Pool currently holds a 14.99% stake in the hospitality company. The potential deal was reported to possibly trigger an open offer, though these claims have now been denied by the company.

New Hotel Operation Agreement in Tirupati

On December 29, 2025, Lemon Tree Hotels announced the execution of a Hotel Operation Agreement for an upcoming property in Tirupati, Andhra Pradesh. The hotel will be operated by Carnation Hotels Private Limited, a wholly owned subsidiary, under the "Lemon Tree Suites" brand.

The Tirupati location represents a strategic choice, positioned in a major pilgrimage center known for the Sri Venkateswara Temple. The hotel will offer comprehensive facilities including dining, event spaces, and recreational amenities.

Company Portfolio and Stock Performance

Lemon Tree Hotels operates an extensive network of more than 110 properties across over 75 cities. The company maintains an international presence in Dubai, Bhutan, and Nepal, demonstrating its regional expansion strategy.

Regarding stock performance, Lemon Tree shares experienced a muted year in 2025, gaining just 4% during the period. The stock price has declined 4% in 2026, reflecting mixed market sentiment toward the hospitality sector.