Exactly three weeks to the deadline date, Orient-Express Hotels has formally rejected Indian Hotel's $1.8-billion takeover bid, terming it "deeply unattractive from a financial perspective". The US hotelier has also announced the appointment of a new Chief Executive Officer, cementing its position in the US market, and further complicating Indian Hotels efforts to acquire the luxury hotel chain.
Tata Group-owned Indian Hotels, which bid around $1.86 billion on October 18 to acquire US-listed Orient-Express Hotels, has been rebuffed the second time. An earlier attempt was made in 2007.
Though couched in formal tones, Orient-Express has informed Indian Hotels of its decision in a letter, stating, "You continue to state publicly that you are offering a significant premium, but your opportunistic proposal was made at a time when the price of Orient-Express shares has been significantly depressed.''
"The board believes the current macroeconomic environment, conditions in the luxury hotel business and factors unique to Orient Express would make this a highly disadvantageous time to sell the company to realise its true value,'' Chairman Lovejoy added.
Responding to the letter, the Indian Hotels Company and Montezemolo and Partners on behalf of the Charme II Fund said they are reviewing the position taken by the Orient-Express Board and considering their options with respect to their offer to acquire Orient-Express.
Indian Hotels and a fund controlled by Italy's Montezemolo and Partners had made a joint bid to acquire Orient Express Hotels for $12.63 a share. The Indian luxury hotelier had also sought a meeting with the US board of Orient Express and Tata group Chairman Ratan Tata along with Ferrari Chairman Luca Montezemolo to discuss the offer.
Delivering its rebuttal, the Orient-Express Hotels also announced the appointment of John M. Scott III as President and Chief Executive Officer and a Director. The 47-year-old Scott was hailed as an experienced operator of luxury hotels who had most recently served as President and CEO of Rosewood Hotels and Resorts, where he oversaw a portfolio of 17 ultra-luxury hotels located in seven countries with combined revenues of more than $500 million.
In a statement, J. Robert Lovejoy, Chairman of the Board of Orient-Express, said Scott has a "deep understanding of the ultra-luxury lodging sector'' and is a "highly regarded leader in the global hotel industry''. He added that during Scott's tenure at Rosewood, he was responsible for doubling the number of hotels under management, significantly increasing EBITDA and securing an active development pipeline of new hotel projects.
Sard Verbinnen, a US-based strategic corporate and financial communications firm, sent out the note to Business Line on behalf of Orient-Express.