Luxury hotel chain Orient-Express, where India’s Tatas have become second largest shareholder, has said talks about its possible acquisition could affect its share price, even as its anti-takeover measures are firmly in place.The company’s share price can fluctuate “significantly” due to various factors including “market speculation about a potential acquisition of OEH,” the NYSE-listed firm said in its annual report for 2007, being sent to its shareholders. OEH, which has been involved in an acrimonious dialogue with Tata group’s Indian Hotels over the latter’s proposal for a business alliance, has recently seen a flurry of share purchase activity by various hedge funds, presumably on expectations for a possible takeover bid by Tatas. The company, however, has made it clear in its annual report that any hostile offer was bound to fail in the current scenario and any such bid would need to win over the company’s board and management in order to succeed. According to the report, Indian Hotels holds 11.5 per cent Class A common shares of the company, making it the second largest stakeholder after Bermuda-based Orient-Express Holdings 1 Ltd (29.8 per cent). The five largest non-promoter shareholders, including Tatas, currently own 41.1 per cent of Class A shares in OEH, which is much higher than 29.8 per cent held by the holdings company. However, while market-traded Class A shares give these shareholders a stake in the company’s equity capital and make them eligible for sops like dividend and stock returns, when it comes to transactions involving an change in control of the firm, the voting rights are mostly vested in Class B shares.The holdings of both class A and class B shares give the holding company a combined voting power of 81 per cent, while all the directors and executives as a 14-member group have a voting power of 81.2 per cent.In comparison, Indian Hotels have a voting power of 2.2 per cent, while the five shareholders together have a voting power of 7.5 per cent.Among these shareholders, Dubai Holdings, which had last year made an unsuccessful attempt at acquiring the company, has a voting power of 1.8 per cent, despite its equity holding of 9.2 per cent.Besides, Steven Cohen-led hedge fund SAC Capital and two other hedge funds DE Shaw and BlackRock have 1.4 per cent, 1.1 per cent and 1.0 per cent voting powers respectively. In terms of equity holding, SAC, DE Shaw and BlackRock have 7.5 per cent, 5.7 per cent and 5.2 per cent holdings respectively.Among these, DE Shaw has said it could participate in a deal involving takeover of OEH, while Tata group is also said to be in touch with various shareholders regarding further hike in its stake.Tata Sons’ Chief Representative for North America David P Good said recently in Chicago that the Orient Express story was still unfolding. Ruling out any hostile takeover move, which is against the Tatas’ business ethics, Good said, “We are in touch with some of the Orient Express shareholders and we are still working with the management.”
