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Sunday, February 12, 2012

Thomas Cook will sell India arm lock, stock & barrel

This story first appeared in DNA Money edition on Thursday, February 9, 2012.

It’s official. Thomas Cook is exiting its Indian subsidiary.
After a series of denials over the last three weeks or so, travel and tour operator Thomas Cook (India) Ltd, or TCIL, has informed the Bombay Stock Exchange that its UK parent has finalised plans to sell its entire 77.1% stake in the entity.

The sale is part of a global restructuring exercise that will see Thomas Cook Group Plc close 200 of its 1,300 high-street stores.
The UK parent is launching a formal sale process for its stake, said the filing, adding that it has received a number of unsolicited, informal expressions of interest from third parties to acquire the stake.

The company stressed, however, that the sell-off will happen only if a compelling bid is received.

“If the offers are attractive, the company will consider selling the stake and use the proceeds to continue to strengthen the group’s balance sheet. TCIL is a strong business, operating in an attractive market. Both the business and the market are growing and Thomas Cook will only sell its stake if a compelling offer is received,” Sam Weihagen, group CEO of Thomas Cook, was quoted as saying.

However, the filing did not disclose either the profiles of potential buyers or the likely timeframe for concluding the deal.

The market, however, is rife with rumours of potential suitors including the likes of Cox & Kings and Travelex in addition to leading global private equity players KKR, Actis, Bain and Carlyle. DNA Money could not independently confirm the participation of any of these entities.

The UK parent reported a pre-tax loss of £151.7 million ($241.2 million) in the three months to December 31 compared with a loss of £99.3 million a year earlier even as revenues increased 3% to £1.86 billion mainly because the operating expenses climbed 10% to £482.1 million.

The group, which has been under financial stress for a while now, sold off its Spanish hotel chain Hotels Y Clubs De Vacaciones to Grupo Iberostar for 72.2 million euro last year.

A Sunday Times report had, on February 4, 2012, said that the UK parent has hired Credit Suisse Group AG to sell the foreign exchange business in India. The BSE filing did not mention any such detail.

TCIL management continued to remain silent on the entire development.

TCIL has presence in 70 Indian cities across 153 owned locations and has close to 65% revenues coming from the foreign exchange business. The company employs 2,700 people in India and has a network of 110 ‘Gold Circle Partners’ and 184 preferred sales agents in over 100 cities in the country. It also has operations in Mauritius and Sri Lanka.

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