The board of Orient-Express Hotels has unanimously rejected the $1.86 billion buyout bid by Tata Group-owned Indian Hotels (IHCL), saying the offer undervalues the company and its assets and that it is not in the best interest of shareholders. Also, the company cited bad macro economic environment for not going ahead with the deal.
This is the third time that the Tata group firm's attempt to gain control of Orient-Express Hotels has failed. The company had earlier made a bid in 2007, but could not move on due to stiff opposition from the then management of the target firm.
On October 18, IHCL, along with Charme II Funds, founded by the family of Ferrari chairman Luca Montezemolo, had made an all-cash offer to acquire the outstanding 93.1 per cent stake at $12.63 per share.
It may be noted that just days back, the US-based hospitality chain had described the bid as "unsolicited".
However, Indian Hotels was keen on the deal, and had just last month asked J Robert Lovejoy, Chairman of Orient-Express Hotels, for a meeting with Tata group Chairman Ratan Tata. In fact, IHCL Vice Chairman R K Krishna Kumar, in a letter to Lovejoy, had cited the examples of Jaguar Land Rover and Corus acquisitions by the over $100 billion conglomerate. In the letter, he said: "... Orient-Express Hotels will remain a separate and independent company with standalone management and board of directors, as has been the policy and practice throughout the Tata Group."
The board of Orient, at its meeting today, also named John Scott as its new chief executive, replacing interim CEO Philip Mengel. Shares of Orient were down 11 per cent at $10.58 on Thursday on the New York Stock Exchange.