After a repeated attempt by Indian Hotels Limited to buyout the Orient-Express Hotels, the operator of luxury hotels, cruise and train services in the West, has rejected the offer stating ‘cheap’ valuation as a reason.

Tata group owned Indian Hotels had bid a 40% share premium price of $12.63 per share or a total consideration of around $1.86 Bn last month.

The bid was made in conjunction with the chairman of Ferrari, Luca Cordero di Montezemolo, who had agreed to invest $100 Mn for a minority stake in the newly combined entity.

Indian Hotels is the second largest shareholder in the company with 7% stake.

Also the repetitive buying attempts are not startling as the shares of Orient-Express have fallen nearly 85% from their all time high of $65.36 in 2007, throwing opportunities for a good buy.

However this is not the first time that Indian Hotels attempted acquisition of the British hotel giant. In 2007 it had offered to form a strategic alliance that was rebuffed by Orient-Express.

A proposal to buy a significant stake was also turned down this year in August.

Dubai based Jumeirah Group was also a bidder for the hotel chain in 2007 but was soon faced by rejection.

Indian Hotels, which has bought around seven properties globally sans much success, stated the reason to buy Orient-Express was the similarity of owning iconic properties by both the groups in various countries.

Orient-Express, that derived its name from Venice Simplon-Orient-Express that links London, Paris and Venice, along with other European cities, is a luxury hotel company and sophisticated adventure travel operator.

This brand currently has 45 hotel, cruise and luxury rail businesses in 22 countries, including distinctive properties such as Hotel Cipriani in Venice, Grand Hotel Europe in St Petersburg, Mount Nelson Hotel in Cape Town, Copacabana Palace in Rio de Janeiro and Maroma Resort and Spa on Mexico's Riviera Maya. The company also operates six luxury tourist trains, two river cruise operations and the '21' Club, one of New York's most iconic restaurants and watering holes.

All of this with recent onset of foreign hotel chains in India has also put pressure on Indian Hotels to diversify into different regions.

Among other players, Accor SA recently sold 60% stake in 15 Formule 1 Hotel projects in India to Samhi Hotels Pvt. Ltd. last month.

Subrata Roy led Sahara Group was planning to acquire 55% stake in the Beverly Hilton Hotel for about $340 Mn from Oasis West Realty in August this year and Roy himself bought Slavija Hotel in Ohrid in September.

The proposed sellers include Hotel Leela Venture, which planned to sell non-core assets to repay debt and Royal Palms put its four hotels for sale.

Previous Article

Hindusthan Glass To Raise Funds

Next Article

Little1 Raises Funds From Radix Group

KVEZAR VIEW

  DEAL TRACKER FOR

Date	Transaction	Type	Buyer	Size ($mn)
2012-11-09	Orient-Express Hotels - Indian Hotels	M&A	Charme II Fund The Indian Hotels Company Limited	1809.78
2007-11-30	Orient Express Hotels - Tata Group	M&A	The Indian Hotels Company Limited	-
2007-09-30	Orient Express Hotels - Tata Group	M&A	The Indian Hotels Company Limited	211.30

 

  Recent Transactions In The Sector

Date	Type	Buyer	Target	Size ($mn)	State
25/03/2013	M&A	Lite Bite Foods Private Limited	Scalini	-	Completed
09/01/2013	M&A	Satish Gupta	Svelte Hotel	19.88	Completed
19/12/2012	M&A	Adrain Zecha	Aman Resorts Private Limited	300.00	Completed
06/11/2012	M&A	Mahindra Holidays and Resorts India Limited	Infinity Hospitalities Group Company Limited	-	Completed

 

  Profiles

Company
Name	Promoters	Office	Competitor	Website
The Indian Hotels Company Limited	R K Krishna Kumar Ratan Naval Tata	Mandlik House, Mandlik Road	KBJ Hotel Limited Sinclairs Hotels Limited Royal Orchid Hotels Limited Asian Hotels (North) Limited	http://www.tajhotels.com

  Advisor

Bank Of America Merrill Lynch

All Comments

Readers' Recommendations

Post a Comment

Display Name		E-mail
Comment
Comments are moderated and generally will be posted if they are on-topic and not abusive.