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India: Indian conglomerate Tata Group has made an unsolicited offer to buy out the remaining 93.1% of Orient-Express Hotels that it does not already control.
The offer, made via Tata’s subsidiary Indian Hotels Co. represents US$12.63 per share, a 40 per cent premium over the current share price.
Indian Hotels Co. said it would finance the US$1.86 billion buyout, with a mix of equity and debt. it also entered into an agreement with Charme II, a private equity fund managed by Montezemolo & Partners to sell its minority stake in Orient-Express for US$100 million if the buyout goes ahead.
Indian Hotels Co. said it was “disappointed” that Orient-Express had declined previous attempts to increase its stake in the business, so it is now proposing a buyout.
R.K. Krishna Kumar, vice chairman of Indian Hotels Co. wrote to Orient-Express Hotels CEO Philip Mengel, saying: “While we are disappointed that your Board of Directors has indicated they would not be interested in exploring a transaction involving a significant equity investment by IHCL, we continue to believe that a transaction between the two organizations is both financially and strategically compelling to our respective shareholders. Therefore, we are 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. This premium cash offer represents a compelling value proposition for the company shareholders, especially in light of the current fragile state of the global economy and the lack of clarity about the prospects for recovery.”
Indian Hotels Co. shared fell five per cent on the announcement of the bid.
www.tajhotels.com
www.orient-express.com
