Have Tatas lost interest in luxury chain Orient Express?

Tata Group owned-Indian Hotelshas decided to not go ahead with a hostile takeover of the NYSE-listed Orient Express for now.

Bermuda-based Orient Express, agroup that owns and operates 50 luxury hotels, trains, cruises and restaurants worldwide,had rejected the take-over bid of Indian Hotels last year.

However the Indian company, which owns the Taj chain, is yet to say that it has lost its interest in the luxury chain that it has pursued for a decade or so.

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For beginners, about a decade ago, Indian Hotels picked up a 10 percent stake in Orient Express for $261 million. It later brought down its stake to 6.9 percent. Last year, Indian Hotels offered $12.63 per share in cash to acquire the outstanding 93.1 percent stake in Orient Express. The offer was at a 40 percent premium to then market price.

In November 2012, Orient Express had termed Indian Hotels’ $1.2 billion unsolicited bid as “too cheap.“Indian Hotels has not revised the bid for acquisition after that.

As of March 31,Indian Hotels has taken a Rs 424 crore hit on its investment in Orient Express. Investors have been wary of its interest in Orient Express. Each time it expressed its keenness to acquire the foreign hotel, Indian Hotels shares were hammered no end.

Not surprisingly, today shares of Indian Hotels are up 2 percent in a flat market.

Raymond Bickson, managing director & chief executive officer, Indian Hotels, told CNBC-TV18, “The market is not right or ripe for us to do something we have not already done.” When asked if Indian Hotels had communicated this to Orient Express, Bickson said, “It would be done so in due course of time."

Indian Hotels’ aim was to bolster its presence in global hospitality through Orient Express.

Recently, a Times of India report pointed out that the value of Indian Hotels’ six-year old stake in Orient-Express Hotels has reduced by two-thirds given the current global economic situation.

With no value addition, the Tatas are probably better off not revising their bid rather than paying a premium for it in a depressed market. Moreover,IHCL has seen its stock shed about a third of its value since it made its bid for the Bermuda-based Orient-Express Hotels last October.

“Things are not really very healthy at for all the hotel industry. If Indian Hotels would have gone for Orient Express then that would have seen quite negative. We have seen the effect of a similar kind in Apollo Tyres. I won’t say that the impact would have been severe but this overhang has gone,” market analyst Sudarshan Sukhani told _CNBC-TV18 r_ecently.