By A. Ananthalakshmi
REUTERS - Orient-Express Hotels Ltd
"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."
Orient-Express also 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.
An Indian Hotels spokesman declined to comment outside regular business hours.
In a letter to Indian Hotels, Lovejoy said the company made the proposal at a time when the price of Orient-Express shares was significantly depressed.
Shares of Orient-Express, which operates the Hotel Cipriani in Venice and the '21' Club in New York, have fallen nearly 85 percent from their all-time high of $65.36 in 2007.
Before the Indian Hotels bid was made public, they last traded above the $12.63 offer price in March 2011.
Orient-Express shares fell 12 percent on Thursday to $10.51, adding to the 7 percent decline since the Indian Hotels offer, indicating that investors were not confident that a deal will close.
Indian Hotels, Orient-Express' second biggest shareholder with a 7 percent stake, had offered to form a strategic alliance with the U.S. company in 2007 but was rebuffed.
Dubai-based Jumeirah Group had also offered to buy Orient-Express that same year but was turned down.
HIGHER OFFER?
In late October, Indian Hotels asked to meet with Orient-Express in a letter that indicated the company could be open to raising its offer.
"To date, we have only had access to public information and, as such, our offer was informed only by this limited data," Indian Hotels Vice Chairman R.K. Krishna Kumar wrote in a letter to Lovejoy.
"To the extent you and your advisors wish to discuss value drivers of which we may not be aware, we would be pleased to engage in a constructive dialogue regarding these issues."
Indian Hotels went public with its $1.2 billion offer in October after its proposal to buy a significant stake in the company was rejected in August.
Under the proposed deal, Italian group Charme II Fund, managed by Partners SpA and 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 combined group.
The Indian hotel chain 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.
