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Sunday, March 4, 2012

Thomas Cook says no piecemeal sale of company

This story first appeared in DNA Money edition on Friday, February 17, 2012.

Despite the financial stress faced by its UK parent, travel operator Thomas Cook India, which has been put on the block, on Thursday said the proposed sale is not a distress sale and the decision was taken based on the number of unsolicited expressions of interest received for the company.

Madhavan Menon, managing director, TCIL, said, “From the UK parent’s point of view, they clearly recognise that this is a business that is doing well and is a major player among the businesses present in this country. It is not a distress sale and unless the parent sees a value, a sale will not happen.” Menon said.

Menon said a detailed process being conducted by Credit Suisse was a two-staged one and is yet to begin. “We would try and complete the process quickly because when there is a stake sale it can lead to some amount of distraction from the business. And it is our intent to finish it (sale) at the earliest,” he said.

Menon said there would not be any piecemeal deal and Thomas Cook India will be sold as one piece. “At this stage, however, it would be speculative on my part to speak anything about
what the new owner would do with the business after having acquired it because we don’t even know who
the owner could be,” he said.

Reiterating his views on the Indian entity, Menon said that Thomas Cook India has operated independently of the UK parent, be it financially or commercially. For TCIL, foreign exchange is a major contributor to its overall business while it is the packaged holidays for their UK parent.

TCIL also said that the company management did not have a preference as to who the potential buyer would be as it entirely depends on what value the parent expects to obtain from such a sale.

“I don’t want to get into the expectations of the parent, because it is too early to speculate as to what they want. It is also driven by the fact that there are rules and regulations that govern the price, given that we are publicly-listed company. We are going through a process whereby there will be a price discovery and we will have to wait for that to happen,” he said.

To a query on whether TCIL would prefer a financial investor as a buyer who will retain the existing management as against a strategic buyer who may not, Menon said, “We have a successful management team and anybody who buys this business would obviously see some value in it because the team has built up this company over the last six years.”

The new buyer will have to negotiate the terms for the use of the Thomas Cook brand.

“The brand is available for a minimum 7 years and it will depend on what the bidders make of it and what value they appropriate towards it,” said Menon.

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