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Tata group firm Indian Hotels Company Ltd (IHCL) has decided to drop its $1.7-billion pursuit of US luxury hotel chain Orient-Express Hotels, after two unsuccessful attempts.
“…after taking into account all factors, the current economic environment as also other opportunities and priorities for the company, the Board of IHCL has decided not to pursue the aforementioned transaction and all contracts that were entered into to facilitate the bid, have since been cancelled. An appropriate amended disclosure is being concurrently filed with the Securities Exchange Commission,” IHCL said in a late evening communication to stock exchanges.
About a decade ago, the Tatas had picked up 10 per cent stake in Orient-Express for $261 million, paying a hefty premium from the open market. Through Samsara Properties, a wholly owned entity, IHCL continues to hold a minority stake in Orient-Express. It had proposed to finance the second bid through a combination of debt and equity.
The Indian hospitality major had first set eyes on Orient-Express Hotels in 2007, but attempts to increase its stake hit a roadblock following opposition from the target company’s shareholders.
In October last year, Indian Hotels, along with Charme II Funds founded by the family of Ferrari Chairman Luca Montezemolo, had offered $2.63 per share in cash to acquire the outstanding 93.1 per cent stake in Orient-Express. Subsequently, the US company had written back to IHCL communicating its inability to consider the offer.
Q2 loss widens
Announcing its second-quarter results, IHCL said its net loss has widened to Rs 433 crore from Rs 57 crore in the corresponding quarter a year ago. Total income from operations for the hospitality firm rose to Rs 896 crore from Rs 814 crore last year.
During the quarter, the company’s total expenditure rose to Rs 938 crore (Rs 849 crore). Ahead of the announcement, the IHCL scrip was down 2.12 per cent on the BSE, closing at Rs 50.85.
> adith.charlie@thehindu.co.in
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