Last month, Orient-Express rejected a $12.63 per share cash, or $1.5 billion, merger offer from Indian Hotels, which is an affiliate of India's Tata Group Ltd. and operates hotels under its Taj brand. The Orient-Express takeover contest has been ongoing since 2007 when Dubai Holding LLC made a $60 per share unsolicited offer for the owner of luxury hotels, clubs and the storied train-line business. Indian Hotels at that time also made an approach regarding a partnership or other combination of assets.
While the board and management of Orient-Express have changed since the 2007 takeover approaches from Dubai Holdings and Indian Hotels, Orient-Express rejected the most recent bid on similar grounds as the prior offers -- the potential dilution of its brand and divergent management styles.
Orient-Express also last month announced a new CEO after a prolonged search: John Scott III, formerly of Rosewood Hotels.
Media reports out of Mumbai this week said Indian Hotels is weighing a revised offer in the $16 to $18 per share range. That potential bid might be guided by perceived investor sentiment. Cohen & Steers Capital Management, a 13% shareholder, said following the $12.63 offer from Indian Hotels that the company should consider selling at a price that approached $18 per share.
The most recent Indian Hotels approach involved backing from Montezemolo & Partners SGR SpA, an Italian private equity fund, that was expected, as part of its participation, to take control of certain assets of Orient-Express in Italy.
Shares of the hotel company traded Wednesday for $12 -- a discount to the $12.63 rejected offer but still well above its roughly $9 per share value before the revised bid in mid-October.
Comment was not available from Indian-Hotels. Orient-Express had not received a revised proposal as of Wednesday.
The primary risk with the situation remains that Orient-Express can legally defend a rejection of any bid regardless of the position of shareholders. The company controls about 64% of its own vote through a subsidiary controlled by a "sub-board" of the Orient-Express board. Orient-Express is incorporated in Bermuda and the share class structure that allows its board to control its own shareholder vote was challenged in 2008 by hedge funds D.E. Shaw & Co. LP and CR Intrinsic Investments LLC and upheld by the Bermuda court in a 2010 decision. As a consequence, Indian Hotels must follow a friendly takeover path on which it has failed to gain any traction.
Squire Sanders LLP appointed Michelle Chen as partner in its global corporate practice in London. For other updates launch today's Movers & shakers slideshow.
The social network's anticipated $60 million acquisition of Titan Aerospace doesn't compare to the $19 billion Facebook shelled out for WhatsApp, but it could have major repercussions. More video