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Tatas launch hostile bid for British luxury chain Orient Express Hotels
MUMBAI: Tata-owned Indian Hotels Company Ltd has launched a bid to control British luxury chain Orient Express Hotels along with Ferrari boss Luca Cordero di Montezemolo and Paul White. Interestingly, White is a former chief executive of the New York-listed Orient Express Hotels and had earlier opposed an alliance with the Indian conglomerate.
IHCL informed the bourses that it will be making an offer for 100% shares of Orient Express five years after it purchased a minority stake in the London-headquartered hospitality giant. IHCL currently holds about 7% stake and is making an offer to mop up the entire outstanding Class A shares at $12.63 a piece, valuing Orient Express at almost $1.9 billion. This represents 40% premium to the closing price of Orient Express on Wednesday.
IHCL vice chairman R K Krishna Kumar wrote to the Orient Express interim CEO Philip R Mengel about the unilateral move after failed attempts to strike a partnership, which analysts describe as a bold hostile move from an Indian group little known for board room adventures. IHCL will fund the proposed buyout through a combination of equity and debt, with financing coming from Bank of America, ICICI Bank and Standard Chartered. Bank of America Merrill Lynch is advising IHCL on the transaction.
Tata group hospitality entities will chip in with the equity contribution. Samsara Properties, a 100% subsidiary of IHCL, is leading the bid, in which Paul White is a director. Ferrari chief Montezemolo's family fund, Charme II, will contribute $100 million in equity making it a broad based Indo-European bid for the marquee asset. Outgoing Tata chairman Ratan Tata had once nurtured a desire to acquire a stake in Ferrari and has long-standing ties with the family, which have now led to a joint acquisition bid for Orient Express.
Orient Express has two types of equity shares -- Class A and Class B, the former listed on the bourses, while the latter is held by an OEH subsidiary with disproportionate voting rights. This still leaves the takeover battle an intriguing affair, if the Orient Express board decides to stall the Tata move once again.
IHCL's previous attempts to clinch an alliance with Orient Express were rebuffed by the latter's management led by Paul White, which had led to a clash of words which at times acquired racist overtones. White stepped down as Orient Express CEO last year, and made a stunning move to the Tata camp, which has bolstered the latest buyout offer.
This could mark a big exit hurrah for outgoing Tata chairman Ratan Tata and his close associate Krishna Kumar who transformed the salt to software conglomerate through a string of high profile acquisitions including Jaguar Land Rover, Corus and Tetley Tea among others.
MUMBAI: Tata-owned Indian Hotels Company Ltd has launched a bid to control British luxury chain Orient Express Hotels along with Ferrari boss Luca Cordero di Montezemolo and Paul White. Interestingly, White is a former chief executive of the New York-listed Orient Express Hotels and had earlier opposed an alliance with the Indian conglomerate.
IHCL informed the bourses that it will be making an offer for 100% shares of Orient Express five years after it purchased a minority stake in the London-headquartered hospitality giant. IHCL currently holds about 7% stake and is making an offer to mop up the entire outstanding Class A shares at $12.63 a piece, valuing Orient Express at almost $1.9 billion. This represents 40% premium to the closing price of Orient Express on Wednesday.
IHCL vice chairman R K Krishna Kumar wrote to the Orient Express interim CEO Philip R Mengel about the unilateral move after failed attempts to strike a partnership, which analysts describe as a bold hostile move from an Indian group little known for board room adventures. IHCL will fund the proposed buyout through a combination of equity and debt, with financing coming from Bank of America, ICICI Bank and Standard Chartered. Bank of America Merrill Lynch is advising IHCL on the transaction.
Tata group hospitality entities will chip in with the equity contribution. Samsara Properties, a 100% subsidiary of IHCL, is leading the bid, in which Paul White is a director. Ferrari chief Montezemolo's family fund, Charme II, will contribute $100 million in equity making it a broad based Indo-European bid for the marquee asset. Outgoing Tata chairman Ratan Tata had once nurtured a desire to acquire a stake in Ferrari and has long-standing ties with the family, which have now led to a joint acquisition bid for Orient Express.
Orient Express has two types of equity shares -- Class A and Class B, the former listed on the bourses, while the latter is held by an OEH subsidiary with disproportionate voting rights. This still leaves the takeover battle an intriguing affair, if the Orient Express board decides to stall the Tata move once again.
IHCL's previous attempts to clinch an alliance with Orient Express were rebuffed by the latter's management led by Paul White, which had led to a clash of words which at times acquired racist overtones. White stepped down as Orient Express CEO last year, and made a stunning move to the Tata camp, which has bolstered the latest buyout offer.
This could mark a big exit hurrah for outgoing Tata chairman Ratan Tata and his close associate Krishna Kumar who transformed the salt to software conglomerate through a string of high profile acquisitions including Jaguar Land Rover, Corus and Tetley Tea among others.
