Orient-Express turns down Taj group overtures
By Our Corporate Bureau | 19 Sep 2007
The US-based Orient-Express Hotels Ltd has turned down a proposal from the Tata group's Indian Hotels Co Ltd (IHCL) - which runs India's Taj group of hotels - for a strategic alliance. Orient Express said it wants to remain focused in the luxury segment.
The Taj group had paid $211.3 million (Rs854 crore) for a 10-per cent stake in Orient-Express Hotels earlier this week. It also wrote a letter to Orient-Express to initiate talks for a strategic alliance. (See: Indian Hotels buys stake in Orient-Express)
"The Orient-Express Hotels portfolio of hotels and other travel related services is aimed specifically at the top end of the luxury travel market. The company believes its future growth plans should continue to focus on this segment as an independent company," Orient-Express said in a statement on Tuesday 18 September, declining the offer. A spokesman for Indian Hotels declined comment.
Orient-Express CEO Paul M White has sent a letter to IHCL vice-chairman R K Krishna Kumar setting out the position of the Orient-Express board. On Friday, Krishna Kumar had written to Orient-Express chairman J B Hurlock to discuss an alliance, which was aimed at leveraging global networks and building brand equity for both the companies.
White informed Krishna Kumar that he was ready to meet him as a shareholder only. "Orient-Express has not understood the purpose of our proposal to work together," a Taj group representative said. He added that the conglomerate would meet the Orient-Express brass shortly to explain its position.
Industry sources said the Tata move to acquire a 10 per cent stake was interpreted by Orient-Express as a precursor to an eventual takeover attempt. IHCL subsidiary Samsara Properties purchased the 10-per cent stake from the open market from 17 August to 14 September as "a reflection of its deep commitment to the possibility of an association with Orient-Express Hotels".
Samsara borrowed Rs1,200 crore ($297 million) from a Tata Group company to purchase shares in Orient-Express.
