Categorie: Emerging Markets
Submitted 10 months ago by
Niranjanms
, Partner - Idyabroo, Founder - Avyaya Multimedia
at Idyabroo LLC
Ratan Tata says he is a nice guy who does not believe in hostile takeovers. But this has consequences, it means that a takeover target can spit in your face and say that mere association with you will be demeaning, leaving you looking like an oppressed Harijan. This is the situation Tata faces after being spurned in no uncertain terms by Orient-Express Hotels, the international luxury hotel chain.Till now, Tata has negotiated several friendly global takeovers, ranging from Tetley Tea to Corus. However, his group ran into rough weather after Indian Hotels, its group company, wooed Orient-Express Hotels. Indian Hotels built up a double-digit stake in the multinational, and then proposed a strategic alliance. This looked like the first step in an acquisition.. Orient-Express bristled at the proposal. It declared that any association on of its brands and hotels with a predominantly domestic Indian hotel chain would hurt its brand image and hit its ability to charge premium rates.This was quasi-racism, barely camouflaged in the language of branding. However, berating Orient Express is somewhat beside the point. If global business was a white racist citadel, then Orient-Express' slur, no matter how hurtful, would be factually accurate. In fact, glob...
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Submitted 10 months ago by
Niranjanms
, Partner - Idyabroo, Founder - Avyaya Multimedia
at Idyabroo LLC
5 comments ↓
Orient-Express has so far rejected approaches from Indian Hotels on the basis that any tie-up would diminish its brand.
It also believes there is no strategic fit between a “predominantly domestic Indian hotel chain and our global portfolio of luxury hotels and unique travel experiences”.
Indian Hotels vice-chairman RK Krishna Kumar labelled the remarks before Christmas as “pejorative, inaccurate and libellous” claiming the remarks sounded as if they were from “over-zealous advisor” rather than Orient-Express chief executive Paul White.
Kumar has however now offered an olive branch to Orient-Express, telling the Financial Times: “If there is any element of civil behaviour which we can expect from them, then I think we should expect them to come to some kind of dialogue”.
Indian Hotels is owned by Indian business conglomerate Tata, and Kumar said that a large number of its shareholders were becoming indignant over the merger saga, especially as it owned an 11.5% stake in Orient Express.
“Why are we not pursuing the task of engaging with what we, as the largest shareholder of the company, are advocating that we should do?”
He added that Tata was “waiting” for Orient-Express management to come to the table.
Shares of the company opened firm on Thursday at Rs 147.70, up 1.58 per cent from Wednesday's close, then rallied ahead to witness an intra-day high of Rs 153 and as much as 1.05 lakh shares changed hands on the Bombay Stock Exchange.
On the National Stock Exchange, the company opened at Rs 145.10, touched a high of Rs 148.50, up 2.10 per cent over its previous close and over 3.02 lakh shares got traded.
The tiff between the two hospitality majors started after Orient Express Hotels CEO Paul M White wrote to the Indian Hotel chain that it would not like to associate with any Indian brand.
On December 20, 2007 Indian Hotels, which owns 11.5 per cent in Orient-Express, is a part of the Tata Group.
Demanding an apology by the American hotel chain to the Taj Hotels, the Tatas said it was a proud Indian company and would persevere with its global expansion strategy.
In the strongly-worded communication to the Orient Express Hotel's CEO, the chief of the Indian Hotel R K Krishna Kumar said, "the purpose of this letter is not to pursue a dialogue directly with you but instead to set the record straight on our intention in approaching your company."
Partner - Idyabroo, Founder - Avyaya Multimedia at Idyabroo LLC