Indian conglomerate Tata group will keenly watch a special meeting of Orient-Express shareholders next month, when they would vote to cancel the powers of the promoters to veto hostile bids to takeover the hotel chain.
The meeting would determine the future course of action for Tatas with regard to its association with Orient-Express Hotels (OEH), where Indian Hotels is the largest public shareholder with an 11.5 per cent equity, sources said.
Indian Hotels' previous attempts for a business alliance have been vehemently rejected by OEH, following which at least two hedge fund investors in the company have raised their concerns over its poison-pill like corporate structure to guard against hostile takeover bids.
The two hedge funds, run by billionaire investors Steven Cohen and D E Shaw, together hold 14.3 per cent stake in OEH through the company's market-traded Class A shares, as is the case for Indian Hotels' stake.
However, class A shares translate into little voting rights in cases such as change of control and a vast majority of voting power is vested with Class B shares, which are not traded in market and are entirely held by Bermuda-based promoter holding entity Orient-Express Holdings 1 Ltd.
Amid mounting pressure from the two influential hedge funds, OEH has agreed to seek the shareholders' vote on a special meeting on October 10 on whether it is legitimate to have such a corporate structure.
If shareholders vote for cancelling Class B shares, OEH might become a takeover target, sources said, adding that Tatas would take any call on whether to consider a bid or to sell their holding in case of an offer from any other party only after the meeting, where holders of both Class A and Class B shares would vote as a single class.