Tata’s Indian Hotel Company in takeover bid for luxury hotel Orient Express

Friday, 19 October 2012 - 4:33pm India News Bulletin Desk

Indian Hotels Company, part of the Tata Group conglomerate and the operator of Mumbai’s iconic Taj Mahal hotel, is launching a bid to buy luxury chain Orient Express Hotels. The takeover will give IHC additional presence in 23 countries.

Tata’s Indian Hotels Company already operates 100 hotels across India as well as in more than 15 international locations.

According to the letter sent by IHC to Philip Mengel, interim chief executive of Orient Express, the two companies met in August to develop a closer alliance. The copy of the letter can be found on US Securities and Exchange Commission’s website.

However the Board of Directors of Orient Hotels indicated that they “would not be interested in exploring a transaction involving a significant equity investment by IHCL”.

In a renewed bid for the company, IHC is proposing an alternative transaction whereby Tata Entities would acquire all of the outstanding shares of Orient-Express Hotels for $12.63 per share in cash, representing a significant premium to the Company’s recent share price.

Tata IHC’s latest offer represented a 40% premium to Orient Express’s closing price of $9.02 per share on Wednesday, October 17.

“The price offered represents a premium valuation based on multiples of cash flow in comparison to relevant comparable public companies and comparable M&A (merger and acquisition) transactions over the last several years,” the letter read.

In addition to luxury hotels globally, Orient Express also operates restaurants, cruises and luxury trains across different countries.