Travel firm Thomas Cook said on Friday it was spending up to €249 million (Dh1.4 billion) on acquisitions in India and the Middle East as part of a drive to expand in fast-growing emerging markets.
Europe’s second-biggest travel firm, created last year from the tie-up of German group Arcandor’s travel unit and Britain’s MyTravel, said it would buy Thomas Cook branded businesses in Egypt and licences for the Thomas Cook brand in 15 Middle East countries.
It is also on the lookout for more deals, particularly in Russia, China and India.
“We want to establish [ourselves] in the emerging markets because they are the growing market,” said Thomas Cook’s Chief Executive Manny Fontenla-Novoa.
“The exciting thing about India is that the natural growth there is 15 per cent... and we have a good management team there. We have identified India, Russia and China, probably in that order,” he added.
Thomas Cook also said it was buying up to 74.9 per cent of Thomas Cook India (TCIL), India’s second-biggest travel group.
All the businesses are being bought from Dubai Financial Group, and Thomas Cook will pay between €208m and €249m cash, depending on the size of the stake it takes in TCIL.
The travel firm further said it would buy at least 61.8 per cent of TCIL, including 54.9 per cent in a private transaction at a price of Rs107 a share. It will tender for up to a further 20 per cent in an open offer at the same price.
At 9.30am GMT, TCIL shares closed up five per cent at Rs88.5.
Thomas Cook shares were down 2.7 per cent at 289 pence in a weak London market, valuing the business at about £3bn.
Landsbanki analysts said in a research note that Thomas Cook was paying a full price for TCIL.
“This is very expensive for a travel business, which can partly be justified on the growth potential. While it meets the group’s acquisition criteria, we have always thought these criteria were weak,” they wrote, keeping a “buy” rating on Thomas Cook’s stock.
Thomas Cook said it expects a boost in profits from India, Russia and China. (Reuters)
Tapping The Demand
Fontenla-Novoa said the deals meant the company would own all Thomas Cook-branded businesses around the world.
With reference to Russia, he said Thomas Cook was interested in tour and retail operators that service healthy demand there for sun and beach holidays, but did not name specific targets.
Follow Emirates 24|7 on Google News.