Orient Express rejects Indian Hotels' takeover bid
09 November 2012
Luxury hotel chain Orient Express has once again rejected Tata-owned Indian Hotels' takeover bid saying the proposal significantly undervalued the company.
The rebuff comes as a major setback to the attempt of the Tata group company to substantially increase its global footprint and reduce dependence on its India business.
According to analysts, though Tatas might think of increasing the offer price, which was already a a 40-per cent premium to the prevailing share price of Orient Express at the time of offer, investors of Indian Hotels were happy with the rejection by Orient Express.
As of March this year Indian Hotels' debt stood at Rs3,800 crore, and it was willing to take on Orient-Express' debt too (of about $530 million or Rs2,800 crore) post the acquisition.
According to analysts, the rejection by OEH may not be the end of the road for the Tata group. They point out that while Tata's offfer price at the moment was a 40 per cent premium, it was lower than Orient's peak price of $60 per share in November 2007.
A report in The Economic Times said that Tatas had already arranged funding and though Indian Hotels had not made any public statement to that effect, the price increase option may be on the table and might be resorted to if needed.