IHCL, which runs the Taj and Ginger brand of hotels, has seen its stock shed nearly a third of its value since it made its made its bid for Bermuda-based Orient-Express last October. The company has already taken a hit of R424 crore on its investment in Orient-Express for the quarter ended March 31, during which it reported a loss of R339 crore for the period.
An email seeking comment from IHCL did not elicit a response, while Orient-Express could not be immediately reached.
IHCLs scrip rose to R50.20 on the BSE on Wednesday, a 3.83% increase over Tuesdays closing price of R48.35 per share, on a day the Sensex gained just 0.22%. IHCL, which held a 7% stake in the US-listed company, teamed up with Italian businessman Luca Cordero di Montezemolo, the 66-year-old chairman of Ferrari, last October to bid $12.63 a share for Orient-Express, a 40% premium to the companys share price before the offer. The offer had also included the assumption of debt.
The bid was rejected on November 8 by the Orient-Express board, saying the offer was inadequate and value destructive. Orient-Express largest share holder Cohen & Steers had expressed its desire to see a higher bid. Orient-Express, which gets its name from the Venice Simplon-Orient-Express, a private luxury train service from London to Venice, has been a long-standing takeover target for the Tata Group under ex-chairman Ratan Tata. IHCL first bought a stake in Orient-Express, which runs Hotel Cipriani in Venice, the Copacabana Palace in Rio de Janeiro and the 21 Club in New York, in 2007.
Indian hotel chains have been keen on global acquisitions as valuations in markets such as the US and Europe have declined since the financial crisis and the ongoing slowdown.
While some reports in late 2012 had said that IHCL was considering raising its bid for Orient-Express by 10-15 %, it now appears the deal is dead. Orient-Express stock, which touched a high of $64.80 on October 31, 2007, has lost around 80% since then, most of it in 2008 in the wake of the financial crisis. It closed at $12.42 on Tuesday on the New York Stock Exchange. Orient-Express was trading at $12.49, up $0.07 or 0.6% at the time of going to press.
IHCLs revenue was R556 crore for the March quarter against R560 crore for the corresponding quarter in the preceding year. At the end of March, the companys standalone debt stood at R2,500 crore while the consolidated debt was R3,800 crore. IHCL reported a consolidated net loss of R430 crore in 2012-13 as against a consolidated profit of R3 crore in the previous fiscal.