Indian Hotels Company Ltd (IHCL) is deliberating hiking its USD 1.8-billion bid for Orient Express Hotels (OEH) to ensure a better price per room for the entire portfolio. Investment bankers said IHCL’s USD 12.63-a-share bid was not off the mark, and alluded to reports that indicated “a blended price per key for the entire portfolio,
by applying a prudent asset value to each property”.
One aggregate “price per key estimate was placed at USD 618,000. After extracting corporate costs, real estate losses etc., we arrive at an equity value of USD 1.193 billion, or USD 12 a share,” the experts said in report by Amrita Nair-Ghaswalla in The Hindu Business Line. Officials added, “The value drivers are the owned hotels. The European assets of OEH command a high per key value.”
After Cipriani, OEH’s Hotel Splendido and Splendido Mare with 80 rooms, have an assumed per key value of USD 2,500,000. The Villa San Michele with 46 rooms and the Hotel Caruso Belvedere with 48 rooms have the same per key value, as does the Hotel Caruso Belvedere with 48 rooms. IHCL has teamed up with a fund controlled by Italy’s Montezemolo and Partners, an Italian company directly owned by the Montezemolo family, the manager of Charme II Fund. The latter, in turn, is a minority shareholder in the Special Purpose Vehicle set up for the transaction.
Though IHCL proposes to finance the acquisition through a combination of debt and equity, the company has said total funds required to consummate the transaction are in place.
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