Indian Hotels up 3%; Orient Express snubs buyout bid again
It could be third time unlucky for Indian Hotels as rival Orient Express, which operates luxury hotels and trains has turned down its acquisition bid yet again.
November 09, 2012 / 15:36 IST
Moneycontrol Bureau
It could be third time unlucky for Indian Hotels as rival Orient Express, which operates luxury hotels and trains has turned down its acquisition bid yet again.The Tatas-owned Indian Hotels, which already holds around 7 percent stake in Orient Express had along with Charme II fund founded by Ferrari Chairman Luca Montezemolo, bid over USD 1.2 billion to acquire the company. Indian Hotels, which operates the Taj Group of Hotels, had offered to pay USD 12.63 a share to buy Orient Express. However, that has been rejected as "unattractive.""The Indian Hotels' proposal is deeply unattractive from a financial perspective. The board believes the current macro-economic environment, conditions in the luxury hotels business, and factors unique to Orient Express would make this a highly disadvantageous time to sell the company to realize the true value," Orient Express Chairman Robert Lovejoy said in a statement.Indian Hotels' Vice Chairman RK Krishna Kumar had written a letter to Lovejoy last month explaining the objectives and hinting at an improved offer.But Orient Express says its better off as an independent company. Now that it has rejected the offer, will Indian Hotels raise its bid, needs to be seen. According to the Reuters news agency, the company is considering its options now.Analysts have already questioned Indian Hotels' acquisition bid, its third for Orient Express, given the slowdown that has hurt the hotel industry amid the overall global economic downturn and the fact that the company is already struggling financially. The stock has fallen 10 percent since it made its offer last month.The Tata-Group company reported a net loss of Rs 6 crore in the second quarter, compared with a profit of Rs 8 crore a year ago.Indian Hotels' shares were up 2.7 percent at Rs 65 on NSE in morning trade on Friday. US-listed Orient Express closed down 11 percent at USD 10.55.
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