INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

THOMAS COOK SET TO BUY LKP FOREX FOR RS 250 CRORE

TRAVEL and tourism major Thomas Cook is close to acquiring LKP Forex, a wholly-owned subsidiary of LKP Merchant Financing. The deal, understood to be in the region of Rs 250 crore, involves a cash payment and transfer of 15% stake in Thomas Cook, post merger, to LKP shareholders.

While Thomas Cook officials said "the deal was far from being finalised", senior LKP officials confirmed on conditions of anonymity that "the two companies are close to a mutuallyagreeable deal". The acquisition talks had earlier hit a roadblock owing to expectations of high valua t i o n s from LKP, which were not acceptable to Thomas Cook.

Industry sources said Thomas Cook would merge LKP Forex with itself to create a larger organisation. In '04-05, LKP Forex and LKP Securities, the whollyowned broking arm of LKP Merchant Finance, recorded a net profit of Rs 2.5 crore and Rs 35 lakh, respectively. Piggybacking on the growth in outbound and inbound tourist traffic, LKP Forex has lined up plans to open offices abroad and to provide currency and travel insurance-related services.

Thomas Cook Overseas, the erstwhile majority shareholder in Thomas Cook India , had transferred its entire shareholding of 60% of the paid-up capital of the company to Dubai Financial, a subsidiary of Dubai Investment Group, in January '06. Subsequently, the company had announced that it is looking at exp a n s i o n through acquisitions in India and abroad over the next couple of months. In April, its board had proposed to double the authorised share capital of the company to Rs 40 crore, comprising 40 crore shares of Re 1 each. It had also proposed increasing the borrowing powers from Rs 250 crore to Rs 500 crore, apart from increasing the FII limit up to 49%.