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Taj Boston

Indian Hotels plans to sell Taj Boston for at least $125 mn

18 May, 2016

Indian Hotels Company Ltd has decided to sell the Taj Boston hotel, in the latest planned sale by the diversified Tata Group as it sheds loss-making assets.

The hospitality arm of the diversified Tata Group said on Wednesday its board has approved a proposal to sell the hotel for not less than $125 million (about Rs 835 crore). It had acquired the US property then known as The Ritz-Carlton, Boston, in 2006 for $170 million (about Rs 815 crore then) from Millennium Partners.

The operator of the Taj group of luxury hotels and resorts said in a stock-exchange filing that United Overseas Holdings Inc, an indirect wholly owned unit, will seek offers from prospective buyers, including real estate investment firms and realty-focused private equity firms, for Taj Boston. The company intends to retain its brand presence on the hotel, it said.

The $110 billion salt-to-software conglomerate had expanded its overseas operations aggressively under previous chairman Ratan Tata through multiple acquisitions in sectors such as beverages, chemicals, steel, auto and hotels in the first decade of this century. But under Cyrus Mistry, who took over as chairman in December 2012, the group has been looking to consolidate its business and cut the debt taken on to finance the acquisitions.

The planned sale by Indian Hotels comes on the heels of the Tata Group’s decision to sell its loss-making UK steel business. Some other Tata Group companies, including Tata Power Co Ltd and Tata Communications, have also been selling overseas assets.

Shortly after announcing plans to sell the UK business in March, Tata Steel sold its European long-products business to investment firm Greybull Capital. It has also shortlisted seven companies for its UK business. Tata Steel had acquired the UK and other European businesses as part of its deal to take over Anglo-Dutch steelmaker Corus Group Plc in 2007.

Tata Power, in 2014, decided to sell its stake in one of its two coal mines in Indonesia for $500 million in 2014. It had acquired the mines in 2007 for $1.1 billion.

Last month, Tata Power said it agreed to sell its 50% stake in a joint venture that is developing a geothermal power project in Indonesia for $30 million (about Rs 200 crore).

Tata Communications is looking for a buyer for the fixed-line assets of its South African arm Neotel Pty Ltd after a deal with a unit of Britain’s Vodafone fell through.

Indian Hotels itself has offloaded assets previously. In 2014, it sold its Blue Sydney Hotel to Hong Kong-based Hind Group for around $30 million.

Besides the 273-room Taj Boston, the company also has the Campton Place hotel in San Francisco and operates The Pierre in New York. Overall, it operates about 100 hotels in India and overseas, according to its website.

The company posted a consolidated net loss of Rs 60.5 crore on net sales of Rs 4,591 crore for the year through March 2016. Taj Boston posted a pre-tax loss of $7.3 million (about Rs 49 crore) on total revenue of $34.1 million for 2015-16 compared with $6.7 million and $34.5 million, respectively, the year before.

The company said the global economic slowdown has hurt the hospitality sector around the world and its profitability as well. “In recent times, the company has been relooking at all options for a course correction in strategy, focusing on growth in high-margin markets, (and) evaluating the relevance of some of its existing assets in the portfolio to reduce leverage,” it added.

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Indian Hotels plans to sell Taj Boston for at least $125 mn

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