REUTERS - Orient-Express Hotels Ltd OEH.N rejected a takeover offer from Indian Hotels Co Ltd (IHTL.NS), controlled by India's Tata Group, saying the $1.2 billion bid undervalues the company.
"The Indian Hotels proposal ... is deeply unattractive from a financial perspective," Orient-Express Chairman Robert Lovejoy said in a statement.
"The board believes the current macroeconomic environment, conditions in the luxury hotel business and factors unique to Orient-Express would make this a highly disadvantageous time to sell the company to realize its true value."
An Indian Hotels spokesman declined to comment, saying the company was still evaluating its response.
In a letter to Indian Hotels, Lovejoy said the company made the proposal at a time when the price of Orient-Express shares was significantly depressed.
Shares of Orient-Express, which operates the Hotel Cipriani in Venice and the '21' Club in New York, have fallen nearly 85 percent from their all-time high of $65.36 in 2007. They last traded above the $12.63 offer price in March 2011.
The luxury hotels group also named John Scott as its new chief executive, replacing interim CEO Philip Mengel. Scott was earlier CEO of Rosewood Hotels & Resorts from 2003 until its sale in 2011.
Indian Hotels owns a 7 percent stake in Orient-Express. It had offered to form a strategic alliance with the U.S. company in 2007 but was rebuffed.
The Indian hotel chain has bought several overseas properties, including the Pierre in New York, but they have not tended to perform as well as its domestic operations, which include its flagship Taj Mahal Palace in Mumbai.
Shares of Orient-Express were down 5 percent at $11.30 on Thursday on the New York Stock Exchange. Indian Hotels shares closed at 63.30 rupees on India's National Stock Exchange.
Reporting by A. Ananthalakshmi in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty