The Bermuda-based company accused Indian Hotels of opportunism in tabling a proposal when the share price of Orient-Express Hotels had been 'significantly depressed' while claiming it was offering shareholders a significant premium on their shares.
In a letter to R.K. Krishna Kumar, vice-chairman of Indian Hotels, J. Robert Lovejoy, the Orient-Express Hotels chairman, said the proposal had undervalued the firm which operates a number of hotels, rail journeys and river adventures across the globe.
He argued shares in the business had been negatively impacted by the global and European economic situation, certain properties being refurbished and the transition to a new chief executive.
Lovejoy also announced the appointment of former Rosewood Hotels & Resorts president and chief executive John Scott to the vacant chief executive post.
Deeply unattractive
"The Board is deeply committed to creating value for our shareholders and will take whatever actions it believes will best accomplish that objective," the chairman said in a statement. "We carefully evaluated the Indian Hotels proposal in that spirit but unanimously concluded it is deeply unattractive from a financial perspective.
"Importantly, 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. Orient-Express has exciting prospects and an unrivalled collection of one-of-a-kind luxury properties that it is taking concerted actions to optimize."
47-year-old Scott will now serve as president, chief executive and a director of the company founded in 1977 by James Sherwood.
"With the appointment of a world-class chief executive officer, whom the board is confident will drive superior long-term value, we believe Orient-Express has a bright future as an independent company serving the interests of shareholders as well as guests," Lovejoy added.
Indian Hotels
Indian Hotels, the Tata Group-owned operator of the Taj Hotels & Resorts brand, had offered to take total control of the Orient-Express Hotels business for $1.86bn, or $12.63 per share.
In a bid to reassure the board of its intentions, Indian Hotels sent a further letter to Lovejoy earlier this month revealing its intention to operate the company as a separate firm if its bid was successful.
Today Indian Hotels released only a very brief statement in response to the rejected bid: "The Indian Hotels Company and Montezemolo & Partners, on behalf of Charme II Fund, today acknowledged the recent announcement by Orient-Express Hotels and are reviewing the position taken by the Orient-Express board and considering their options with respect to their offer to acquire Orient-Express," a spokesperson said.
Orient-Express Hotels operates 46 hotels around the world including Le Manor aux Quat'Saisons in the UK - Michelin-starred chef Raymond Blanc took up a vice-president role on the board of the company in 2010.