Luxury hotels chain Orient Express on Thursday rejected the "unsolicited" $1.86 billion buyout offer from Tata Group firm Indian Hotels, saying the bid significantly undervalues the company.
Indian Hotels had offered $12.63 per share in cash to acquire all the outstanding shares of Orient Express. The $1.86 billion offer was made in October. This was the second takeover attempt by Indian Hotels, which holds about 7 per cent in Orient Express.
The offer "significantly undervalues" the company and its unique assets and is not in the best interests of the shareholders, Orient Express said.
"After thorough consideration, and in consultation with independent financial and legal advisors, our Board of Directors has unanimously concluded that your proposal significantly undervalues Orient-Express and its future prospects," Orient Express Chairman J Robert Lovejoy said in a letter to Indian Hotels Company Vice Chairman R K Krishna Kumar.
Indian Hotels had earlier termed its all-cash offer as "compelling".
In early trade, shares of Orient Express tumbled over six per cent to $11.17 on the New York Stock Exchange.
Lovejoy said that Orient Express board members have "great respect" for Indian Hotels.
"We have taken, and will continue to take, our responsibilities to Orient Express shareholders extremely seriously... that (offer) now would be a highly disadvantageous time to sell the company," the letter said.
The rejection comes on the same day when Orient Express announced the hiring of John M Scott as its new President and Chief Executive Officer.
Indian Hotels along with Charme II Funds, founded by the family of Ferrari chairman Luca Montezemolo, had made an all-cash offer to acquire the outstanding 93.1 per cent stake at $12.63 per share.
In 2007, Tatas had attempted to increase holding in the US entity but the efforts failed due to stiff opposition from the then management of Orient Express.