* Orient-Express says offer undervalues the company
* Names John Scott as CEO
* Shares close down 11 pct
By A. Ananthalakshmi
Nov 8 Orient-Express Hotels Ltd rejected
a $1.2 billion takeover offer from Indian Hotels Co Ltd
as too cheap and appointed a new chief executive,
saying that it was confident of its prospects as an independent
The hotel and restaurant owner, whose properties include the
Hotel Cipriani in Venice and the '21' Club in New York, has a
history of rebuffing takeover approaches.
Its shares closed down 11 percent at $10.55, taking to 16.5
percent below the $12.63 offer price.
"The Indian Hotels proposal ... is deeply unattractive from
a financial perspective," Orient-Express Chairman Robert Lovejoy
said in a statement.
"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 realize its true value."
Indian Hotels, a unit of India's Tata Group that has
interests ranging from steel to software, said it was
considering its options after the rejection.
Late last month, it asked to meet with Orient-Express and
indicated it could raise its offer, if it had a chance to
inspect the firm's books.
The $12.63-per-share offer was at a 40 percent premium to
Orient-Express's previous price, and at a level last seen for
the shares early last year. Orient-Express shares have fallen
nearly 85 percent from their all-time high of $65.36 in 2007.
"There is no question that the board is correct in that it
is not a good time to sell the company," said an Orient-Express
shareholder, who did not wish to be named. "But that doesn't
mean that at the right price this wouldn't be the right time."
The shareholder, who thinks Orient-Express could attract
other buyers, said a right price for the company would be $15
per share or more.
Orient-Express named John Scott as its chief executive,
replacing interim CEO Philip Mengel. Scott was CEO of Rosewood
Hotels & Resorts from 2003 until its sale in 2011 to Hong
Kong-based New World Hospitality.
Indian Hotels, Orient-Express' second biggest shareholder,
offered to form a strategic alliance with the U.S. company in
2007 but was rebuffed.
An offer from Dubai-based Jumeirah Group to buy
Orient-Express that same year was turned down.
Indian Hotels went public with its current offer last month
after a proposal to buy a significant stake was rejected in
It has a 7 percent holding in Orient-Express, behind Cohen &
Steers Capital Management, an investment firm that is the
largest shareholder with 13 percent.
Indian Hotels has proposed that a group managed by Luca
Cordero di Montezemolo, chairman of Italian sports carmaker
Ferrari and a close friend of Tata Group Chairman Ratan Tata,
would invest $100 million for a minority stake in the newly
But Orient-Express -- which has 45 properties in 22
countries, including hotels, tourist trains, restaurants and
cruise ships -- said it was better off as a standalone firm.
The opportunity to grow earnings and cash flow is
significant, and the company is well positioned to deliver
substantial value to its shareholders in 2013 and beyond,
Lovejoy wrote in his rejection letter to Indian Hotels.
Indian Hotels has bought several overseas properties,
including the Pierre in New York, but they have not tended to
perform as well as its domestic operations, which include its
flagship Taj Mahal Palace in Mumbai.