Staff of the Taj Mahal Palace hotel pose in Mumbai in this May 25, 2011 file photo. Indian Hotels Company Ltd., which owns the Taj Mahal Palace and the Pierre Hotel in New York, is offering to buy U.S. luxury hotel chain Orient-Express Hotels.VIVEK PRAKASH/Reuters
Indian Hotels Company Ltd. (IHCL) has made an unsolicited $1.2-billion bid for U.S. luxury hotels group Orient Express Hotels Inc., which turned down an offer in 2007 to form a strategic alliance.
IHCL, controlled by Tata Group, said on Thursday it was offering $12.63 (U.S.) per Orient-Express share, a 40-per-cent premium to the stock's Wednesday close.
Orient-Express stock rose 23 per cent to $11.07.
"Indian Hotels is seeking friendly transaction negotiations and is prepared to devote all necessary resources to mutually beneficial agreement," the company said in a statement.
IHCL, which owns the famous Taj Mahal Palace hotel in India's financial capital of Mumbai, has secured funding, including debt, for the transaction from Bank of America N.A., ICICI Bank and Standard Chartered Bank.
It has also entered into an agreement with Italian group Charme II Fund, managed by Montezemolo and Partners S.p.A, under which it would invest $100-million for a minority stake in the newly combined group.
Under the terms of the proposed transaction, Orient Express would remain an independent company with an independent management team. IHCL would also take over Orient Express debt, which stood at $529.5-million at June 30.
In 2007 IHCL acquired a 10-per-cent stake in Orient Express for about $211.3-million. It now owns about 7 per cent.
IHCL has 99 hotels in 56 locations across India and 16 international hotels including The Pierre Hotel in New York.
Orient-Express owns or part-owns and manages 46 luxury hotels, restaurants, tourist train and river cruise properties in 23 countries.
Bank of America Merrill Lynch is advising IHCL.