Tata's Orient-Express bid hits hurdle

As the year of overseas acquisitions by Indian companies draws to a close, opposition to their nationality is gathering momentum.

US-listed luxury hotel chain Orient-Express has rebuffed Tata Group's offer for an alliance saying any association with the "predominantly Indian" chain will erode the value of its premium brands.

This comes only four days after the US dealers of Jaguar, the luxury car maker that Tata and Mahindra & Mahindra have been seeking to acquire, said Indian owners was not acceptable to them. The pretext was the same: image issues.

One would have expected the bias against Indian companies to subside after L N Mittal managed to surmount it to acquire European steel maker Arcelor.

Curiously, Mittal's Indian passport had become an issue even though his company Mittal Steel still does not have an operational project in India.

The rejection from Orient-Express comes days after Tata Group firm Indian Hotels raised its stake in the American firm to 11.5 per cent and made a renewed proposal for a business combination, even as group chairman Ratan Tata spoke against hostile takeover.

"We do not believe that there is a strategic fit between your predominantly domestic Indian hotel chain and our global portfolio of luxury hotels," Orient-Express CEO Paul White wrote in a bluntly-worded letter to Indian Hotels Vice-Chairman R K Krishna Kumar.

Indian Hotels disclosed on September 14 buying a 10 per cent stake in Orient through open market purchases and had then sought an alliance between the two companies.

Replying to Indian Hotels' offer of last week, White wrote: "We do not wish to be involved in an attempt to improve the performance of your non-Indian properties."

White's letter added said: "As you are fully aware, we have previously advised you that Orient-Express has no interest in pursuing the proposals... We felt that our prior correspondence with you was sufficiently clear in communicating our position on this matter, but because you have again expressed an interest in a transaction with Orient-Express, we feel it is appropriate to outline some of the reasons why we do not wish to pursue your proposals."