INDIA BUSINESS WORLD - March 1st - March 15th - 2008
UK TRAVEL RETAILER THOMAS COOK TO HOLD MAJORITY IN INDIA ARM
Reversing a decision taken two years ago, UK travel retailer Thomas Cook said that it would acquire Dubai Financial Group's 55% stake in Thomas Cook India (TCIL) for Rs 107 per share. The cash-strapped UK company had sold its Indian business to the Dubai company for Rs 52 per share in January 2006. Its Egyptian operations had also been sold. The company's fortunes have since turned around and it has merged with fellow British package tour company Mytravel. The merged entity is listed on LSE as Thomas Cook Group. German travel group KarstadtQuelle owns 52% of the firm.
Thomas Cook said it would spend up to $384 million on the acquisition of the Indian and Egyptian businesses. It will make an open offer to the Indian public to acquire a further 20% in TCIL at Rs 107 per share.
Thomas Cook's stake can't exceed 75% in keeping with Indian stock market listing regulations. At Rs 107 per share, TCIL is being valued at Rs 1,290 crore.
Responding to the news, the TCIL share rose 5% on BSE to close at Rs 88.50 on a day the market closed down 3.4%. The acquisition is being seen as a positive development for the company since it solves the uncertainty over the right to use the Thomas Cook brand. Dubai Financial Group had the rights to the brand for a limited period and TCIL was in the process of creating a new brand—100% Holidays—to replace it. After the latest deal, the use of the brand across the world rests with Thomas Cook.
TCIL MD Madhavan Menon said the company would gain significantly because a strategic shareholder offers more synergies than a pure financial shareholder. TCIL has been very aggressive during Dubai Financial Group's two years at the helm. It has made a series of acquisitions, most notably LKP Forex (Rs 200 crore) and Travel Corporation of India (for Rs 182 crore). The integration of the two companies with TCIL is in progress, a source said.
TCIL employs about 2,500 people with a total retail network of 180 outlets across 40 cities. Approximately half its revenues are from foreign exchange and the other half from travel businesses. It is now the largest foreign exchange operator with approximately 50% market share.
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