Indian Hotels Company purchased a strategic 10% stake in Orient-Express Hotels (NYSE:OEH) for $211.28 million in the open market, according to a Schedule 13D filing with the SEC. Shareholders are hoping that this move may spark a bidding war for the prized hotel chain.

"We have always recognized Orient-Express for its admirable range of ultra luxury hotels and resorts distinguished for their uniqueness and standards of excellence," said Vice Chairman Krishna Kumar. "A possible association between our two companies would bring unique competitive advantages to both companies."

Indian Hotels believes that a combination of the two companies would result in a geographically balanced presence with synergies in several complementary destinations. Moreover, Orient-Express would have a strong ally in the rapidly growing Indian market along with synergies in areas of marketing and strategic sourcing.

The company responded today in an 8-K filing, saying, "You should be aware that the Board of Directors of Orient-Express Hotels, after deliberation, does not wish to pursue the proposals mentioned in your letter. Accordingly, any meeting with you as shareholder would not include those proposals as topics for discussion."

Despite this, rumors are surfacing that many other large players like billionaire brothers David and Simon Reuben along with private equity firms like Quinlan Private and Starwood Capital may be building up stakes to mount competing bids. This could eventually spark a bidding war for a hostile takeover, which is not unheard of in the markets.

In the end, this is definitely a stock worth watching as the hotel chains assets aer clearly in demand. Whether or not anything comes of this stake remains to be seen, but it will be interesting to see what comes of the company's meeting with Indian Hotels.

Related Companies
Sea Containers (SCRA)