Given the Tata group?s track record in smooth takeovers and alliances, industry analysts believe that striking an agreement with US-based luxury hotel major Orient Express Hotels (OEH) is just a meeting away, when the Tata Group top brass will get the opportunity to communicate the exact nature of the strategic relationship they are looking for.
Neha Bubna, an analyst with UTI Securities, told FE, ?The company has already invested $211 million in the US major and it is not going to let go of it that easily. It would pursue it vigorously.?
Orient Express had, on Tuesday, rejected the Tata Group?s subsidiary Indian Hotel Company Ltd?s (IHCL) offer to forge a partnership. IHCL had acquired a 10% stake in OEH through the open market from August 17-September 14. The CEO of OEH, Paul M White, had sent a letter to IHCL vice-chairman RK Krishna Kumar stating that the board of Orient Express, after discussions, decided to turn down the alliance proposal. The company, though, has agreed to meet Krishna Kumar as a shareholder of the company.
However, the industry is unanimous in saying that the Tata group company will probably opt for the exit route if it fails to convince the Orient Express management, as a portfolio investment of 10% in the US hospitality company does not make good financial sense.
Industry observers felt that Orient Express misunderstood the offer put forth by Tata, and thought it was a move to takeover the entire company and that?s why it rebuffed the offer instantly.
Officials from Tata were not available for comment.