Oct. 19, 2012--NEW DELHI -- Shares of the Tata-group owned Indian Hotels Co, fell more than 5 per cent Friday as investors questioned its takeover bid for luxury chain Orient-Express Hotels for nearly 2 billion dollars.

India's largest hotel operator, which holds about a 7-per-cent stake in the US-listed hospitality giant, late Thursday made an offer to mop up the outstanding 93 per cent at 12.63 dollars per share, in the proposal valued at about 1.86 billion dollars.

On Friday, shares of IHC tumbled nearly 5.5 per cent to 66.35 rupees on the Bombay Stock Exchange at 12:55 pm (0740 GMT) over concerns about the financial health of the company amid the slowdown in the hotel industry.

According to media reports, Indian Hotels had reported a loss of 334 million rupees in the April-June quarter, bigger than the 222-million-rupee loss in the previous quarter.

"Given that there is already a strain on IHCL's financials and the global slowdown, I don't think this aggressive bid for Orient-Express is a good move," Neha Majhithia, an analyst at Microsec Capital, told leading financial portal moneycontrol.com.

IHCL said it launched the bid after the Orient-Express indicated it would not be interested in an equity investment. Its letter stated that if acquired the new Orient-Express Hotels will continue to remain an independent company.

The offer represented a 40-per-cent premium over the firm's closing price on Wednesday, IHCL said in a letter to the group, a copy of which was filed with the US Securities and Exchange Commission.

Indian Hotels runs 99 hotels at 56 locations across India, with 16 international hotels including the Pierre Hotel in New York and the iconic Taj Mahal Palace in Mumbai.

Orient-Express operates 46 luxury hotels, restaurants, tourist trains and river cruises in 23 countries.

___

(c)2012 Deutsche Presse-Agentur GmbH (Hamburg, Germany)

Visit Deutsche Presse-Agentur GmbH (Hamburg, Germany) at www.dpa.de/English.82.0.html

Distributed by MCT Information Services NYSE:EXPR,