| Font Size |
Indian Hotels had offered USD 12.63 per share in cash to acquire all the outstanding shares of Orient Express. The USD 1.86 billion offer was made in October. This was the second takeover attempt by Indian Hotels, which holds about 7 per cent in Orient Express.
The offer "significantly undervalues" the company and its unique assets and is not in the best interests of the shareholders, Orient Express said.
"After thorough consideration, and in consultation with independent financial and legal advisors, our Board of Directors has unanimously concluded that your proposal significantly undervalues Orient-Express and its future prospects," Orient Express Chairman J Robert Lovejoy said in a letter to Indian Hotels Company Vice Chairman R K Krishna Kumar.
Indian Hotels had earlier termed its all-cash offer as "compelling".
In early trade, shares of Orient Express tumbled over six per cent to USD 11.17 on the New York Stock Exchange.
Lovejoy said that Orient Express board members have "great respect" for Indian Hotels.
"We have taken, and will continue to take, our responsibilities to Orient Express shareholders extremely seriously... that (offer) now would be a highly disadvantageous time to sell the company," the letter said.
The rejection comes on the same day when Orient Express announced the hiring of John M Scott as its new President and Chief Executive Officer.
Indian Hotels along with Charme II Funds, founded by the family of Ferrari chairman Luca Montezemolo, had made an all-cash offer to acquire the outstanding 93.1 per cent stake at USD 12.63 per share.
In 2007, Tatas had attempted to increase holding in the US entity but the efforts failed due to stiff opposition from the then management of Orient Express.
In the letter, Lovejoy said, "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".
According to him, Orient Express shares have been negatively impacted by various factors including economic turbulence, particularly in Europe, important properties in the midst of refurbishment projects, and the transition to a new CEO.
"Our opportunity to grow earnings and cash flow is significant, as many of our core properties are expected to achieve in 2012 substantially less than their peak EBITDA. "... We are encouraged by the growth in our advance bookings for 2013, which are currently well ahead of last year at this time. In addition, the market value of our unique properties is underscored by the prices per key paid in some recent sales of iconic assets," the letter said.
