Orient-Express rejects Tata overtures

The NYSE-listed Orient-Express Hotels has rejected the Tata Group's offer to forge a strategic alliance with it. The rejection comes barely a day after Indian Hotel Company (IHCL), a Tata subsidiary which runs the Taj chain of luxury hotels, announced the acquisition of a 10 per cent stake in Orient-Express as a commitment to form an alliance.

Orient-Express CEO Paul M White today sent a letter to IHCL Vice-Chairman R K Krishna Kumar saying the Orient-Express board, after deliberation, did not wish to pursue the alliance proposal. On Friday, Krishna Kumar had written to Orient-Express Chairman J B Hurlock to discuss an alliance, which was aimed at leveraging global networks and building brand equity for both the companies.

However, White informed Krishna Kumar that he was ready to meet him as a shareholder only. The Tata Group's future course of action on Orient-Express could not be immediately ascertained. Krishna Kumar could not be reached for comments, either. "Orient-Express has not understood the purpose of our proposal to work together," a Tata Group source said, adding that the conglomerate would meet the Orient-Express brass shortly to explain its position.

Industry sources said the Tata move to acquire a 10 per cent stake was interpreted by Orient-Express as a precursor to an eventual takeover attempt. "Orient-Express, therefore, did not welcome the Tatas' alliance proposal," an industry observer said.

IHCL yesterday said its wholly-owned subsidiary, Samsara Properties, purchased a 10 per cent stake from open markets in the August 17-September 14 period for Rs 850 crore as "a reflection of its deep commitment to the possibility of an association with Orient-Express Hotels". Samsara borrowed Rs 1,200 crore from a Tata group company to purchase shares in Orient-Express.