More shareholders are joining hedge funds DE Shaw and CR Intrinsic in their bid to redraw Orient Express’ ownership structure which would facilitate a takeover bid for the luxury hospitality chain.
The move is significant as this could help the cause of would-be acquirers including Tatas (Indian Hotels), the single largest shareholder of the firm. A shareholders meeting is scheduled for October 10, which would decide the fate of the rebels demand.
According to a report in London’s Times, tycoons David and Simon Reuben (who reportedly hold 5% stake in Orient Express) have joined the hedge funds for a change in the company’s corporate-governance structure.
Earlier, billionaires Steven Cohen and David Shaw-led mega hedge funds CR Intrinsic and DE Shaw (together owning 14.3% of Orient Express) called for a special meeting so that shareholders can vote to dissolve the company’s dual-class ownership structure which allows the management to stave off overtures from possible acquirers.
Last month the funds proposed changes to the company’s bylaws that would lead to elimination of all of its super-voting Class B shares, which are controlled by several members of Orient’s board of directors including founder James Sherwood. Incidentally, unlike other dual-class voting structures, the directors who control the Class B shares actually own less than 1% of the company. However, despite this by virtue of the dual-class ownership structure they have been holding back any forceful bid for Orient Express.
The report said that according to the company spokeswoman, holders of “B” shares would be able to block the proposed change to the capital structure. The shareholders who hold “A” class shares are already contemplating legal action if their demands are blocked in the shareholders meeting next week.
Incidentally, Reuben brothers were considered one of the possible bidders for Orient Express last year. The Reubens, who made big bucks with metals business in Russia in 90s, today largely are known as billionaire investors with interests in real estate and private equity.