Trophy buys: Tata may go all out but M&M hesitates

It’s the season of mergers and acquisitions.

India’s bigwigs in the last three months have been busy laying out strategies to acquire global trophy assets to spruce up their image abroad. However, while some are willing to cross any boundary to seal such deals, others are cautious about not allowing vanity to exceed vision.

According to a Times of India report, Tatas-owned Indian Hotels Company is willing to pursue his takeover bid by sweetening the offer for the iconic Orient Express luxury hotels chain, while Mahindra & Mahindra may have pulled out of the bid for Aston Martin, another iconic brand.

[caption id=“attachment_547556” align=“alignleft” width=“380”]  Tatas-owned Indian Hotels Company is willing to pursue his takeover bid by sweetening the offer for the iconic Orient Express luxury hotels chain. Getty Images[/caption]

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As per the ToI reports, Tata is willing to enhance the bidding for Orient by at least 10-15 percent after the cruises-to-hotels company last month turned down $12.63 a piece offer that valued it at $1.86 billion.

A report by Citigroup puts the share price upwards of $15, while one from Barclays gives a higher estimate at $18 a share, 43 percent more than the offer made by IHCL in October.

This sweetened offer would be the third time that Tata zeroes in on Orient Express. In 2008, Tata was eyeing a strategic partnership with Orient Express but was spurned by the company with a rejection that provoked charges of racism from many.

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Orient Express had then said that any association of its brand and hotels with a predominantly domestic Indian hotels chain would hurt its image and hit its ability to charge premium rates.

Yet, an undeterred Tata has pursued his ambition and upped the ante as the acquisition of Orient Express will help the group strengthen its hospitality bandwidth and expand its scale of operations, both domestic and overseas.

However, several analysts and investors are concerned that Tata’s desperate bid to acquire the hotels chain at a premium comes when demand for luxury goods and services is quite tempered.

Financial Times’ David Geller, rightly says, “By hanging around a target that has spurned its advances twice now, Tata Group is beginning to look like a rather desperate suitor. Surely there are other things it could be doing with its time and money.”

Meanwhile, all that talk about Anand Mahindra being torn between vanity and vision can finally be put to rest. A report in the Economic Times says that the debt burden of Aston Martin may have forced Mahindra to pull out of the race for the company.

Secondly, Mahindra in the past has always been smart about investments. From Punjab Tractors to SUV maker SsangYong, strategic fit and potential synergies have been imperative in these deals.

Third, it has always insisted on management control. However, The Investment Dar, the Kuwait-based owner of half of Aston Martin Lagonda, is itself undergoing a court-endorsed rehabilitation process which would span around eight years, the ET report said.

So while Aston Martin as a brand can do wonders for Mahindra on the global stage, surely the latter is not interested in stepping in as merely a portfolio investor.