IHCL looking to board Orient-Express again

Five years after its bid for Orient-Express Hotels was thwarted, the Tata Group-owned Indian Hotels Co (IHCL) has once again thrown the lasso around the New York Stock Exchange-listed global operator of high-end hotels, cruise and train services.

IHCL, the group’s hospitality flagship, along with Charme II Fund, an Italian fund managed by Montezemolo and Partners SpA, has offered to buy the 93.1% stake which it does not own in the Hamilton, Bermuda-headquartered company and take the company private.

IHCL is offering $12.63 per share in cash, valuing Orient-Express at $1.86 billion (`9,936 crore), including its net debt.
The all-cash offer represents a 40% premium to Orient-Express’ closing stock price on October 17, the last trading day prior to this announcement, and a 45.2% premium to its 10-trading day average of closing stock price.

The Orient-Express stock shot up 41.35% intra-day to $12.75 and was trading about 31% at $11.80 at 9.30 pm IST following the offer. The stock has shed 78% since September 2007 when IHCL first made its bid.

IHCL, through Samsara Properties Ltd, a wholly owned subsidiary, currently holds around 7% of Orient-Express.
On Wednesday, the IHCL board authorised the company to make an offer to the Orient-Express board to acquire 93.1% Class A common shares.

“We believe this premium all-cash offer represents a compelling and immediate value proposition for Orient-Express’ shareholders and provides it with access to the additional capital necessary to preserve its properties and heritage while potentially expanding its footprint,” said R K Krishna Kumar, vice chairman, IHCL.

“Despite the takeover, Orient-Express would remain an independent and autonomous company with its own Board of directors,” said an IHCL spokesperson.

IHCL is understood to have raised a war chest for the buy, including debt financing from Bank of America NA, ICICI Bank and Standard Chartered Bank.