Indian Hotels, an arm of the giant Tata Group, has abandoned a $1.2-billion offer to buy Orient-Express Hotels, marking its second unsuccessful attempt to purchase the Bermuda-based luxury global chain.
Indian Hotels Co Ltd (IHCL) made the unsolicited offer last October for Orient-Express, whose name comes from the iconic trans-European train, as it sought to boost its global hospitality presence.
The decision not to pursue the offer -- its second in four years for the chain -- took into account "the current economic environment and also other opportunities and priorities for the company", Indian Hotels said late on Friday.
Indian Hotels had earlier acquired a 6.9% stake in Orient-Express. But the value of its stake has fallen sharply in the face of slowing global demand for luxury travel.
Orient-Express also wrote to the hotel chain to say it "was not an opportune moment for them to consider a sale of their company", Indian Hotels said in a statement.
Indian Hotels has long expressed confidence about its future as an independent company.
The chain, whose overseas purchases include the Pierre in New York, recently reported its second-quarter net loss widened to three billion rupees, from a 63.6 million-rupee loss a year earlier.
The larger loss reflected the writedown of the value of its investments in foreign properties, including Orient-Express.
In 2007, Orient-Express spurned an offer by Indian Hotels for a tie-up on grounds its prestige brand value might be diluted by an association with the Indian company, which owns the premium Taj hotel chain in India and abroad.
The rebuff outraged Indian Hotels whose parent, tea-to-steel Tata Group, is one of India's oldest and most respected business houses.
Orient-Express had rejected Indian Hotels' second offer as "deeply unattractive from a financial perspective" -- even though it represented a 40% premium to share price at the time.
Indian Hotels, which owns the iconic seafront Taj Mahal Palace in financial hub Mumbai and a string of other top hotels in India and abroad, had said last year that acquisition of Orient-Express would create "one of the world's pre-eminent portfolios of luxury hotels and resorts".
Orient-Express's properties include Venice's Hotel Cipriani, the "21" Club in New York, and other deluxe hotels. It also offers high-end train and cruise travel.
Indian Hotels' shares have lost ground since the company made its bid for Orient-Express that was valued at $1.86 billion including the company's debt.
"Things are not really very healthy at for all the hotel industry. If Indian Hotels had gone for Orient Express, that would have seen as quite negative," market analyst Sudarshan Sukhani told India's CNBC-TV18 recently.