New York: US listed Orient-Express Hotels, in which Tata group’s Indian Hotels has acquired an 11.5% stake for about $ 247 million (Rs972 crore), has rejected an offer for a strategic alliance with the Indian conglomerate.
In a reply to Tatas’ proposal for a possible association, Orient-Express, which owns New York’s prestigious Club 9 Restaurants and a number of luxury hotel brands in the US and other countries, said in a statement that aligning with Tatas’ “predominantly domestic Indian hotel chain” would adversely impact the brand value of its premium properties.
Indian Hotels had first disclosed on 14 September a 10% stake acquisition in Orient through open market purchases and had subsequently sought a possible alliance between the two companies.
Despite Orient-Express rejecting its proposal, Tatas have been pursuing for a meeting to discuss a possible deal and again reminded the company of its proposals in November.
Subsequently, Indian Hotels said that it has acquired a further 1.5% stake -- taking its total stake to 11.5% for about $ 247 million.
On 7 December, Indian Hotels once again reiterated its intention to pursue a possible alliance with proposals for brining its non-Indian hotels under the Orient-Express fold, holding of minority stakes in each other’s equity capital and representation on each other’s boards.
However, Bermuda-based Orient Express, through a statement issued late last night, once again rejected the proposal.
“Orient-Express Hotels had previously rejected a similar proposal from the company. The Board of Orient-Express Hotels continues to consider that the IHCL proposal is not in the interests of Orient-Express Hotels and its shareholders and therefore has advised them accordingly,” the statement said.
This is possibly the first global deal being eyed by Tatas in the recent past, where it is finding it tough to get through despite its repeated attempts.
While it succeeded in acquiring Anglo-Dutch steelmaker Corus in a $12 billion deal after months of bidding war with Brazil’s CSN, Tatas are currently one of the front-runners for acquisition of US carmaker Ford’s British luxury brands Jaguar and Land Rover.
Taking note of Indian Hotels’ 11.5% stake, in a letter addressed to Indian Hotels Vice-Chairman R K Krishna Kumar, Orient-Express CEO Paul M White said: “As you are fully aware, we have previously advised you that Orient-Express has no interest in pursuing the proposals described in your letter of 14 November, 2007.”
“We felt that our prior correspondence with you was sufficiently clear in communicating our position on this matter, but because you have again expressed an interest in a transaction with Orient-Express, we feel it is appropriate to outline some of the reasons why we do not wish to pursue your proposals,” he said.
We do not believe that there is a strategic fit between your predominantly domestic Indian hotel chain and our global portfolio of luxury hotels and unique travel experiences, and we do not wish to be involved in an attempt to improve the performance of your non-Indian properties,“ he added.