February 2012
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Thomas Cook says India unit up for sale

Thomas Cook Group Plc said it will sell the 77.1% stake it holds in its Indian unit if the company gets an attractive offer, and use the funds to reduce debt.
The UK-based tour operator said it has received a number of unsolicited informal expressions of interest from third parties to buy its stake in Thomas Cook (India) Ltd and has decided to start a formal sale process.
“If the offers are attractive, we will consider selling our stake and using the proceeds to continue to strengthen the group’s balance sheet,” Sam Weihagen, group chief executive officer, said in a statement to BSE on Wednesday. The UK-based firm has hired Credit Suisse Group AG to help sell the local unit.
On Tuesday, Mint had reported that Thomas Cook is planning to sell its profitable India unit to retire debt and will ask potential buyers for bids starting Thursday. Potential bidders for the Indian unit include rival Cox and Kings India Ltd and a clutch of private equity firms such as KKR India Advisors Pvt. Ltd, Actis Advisors Pvt. Ltd, Bain Capital Advisors (India) Pvt. Ltd and Carlyle Group. However, another rival Kuoni Travel (India) Pvt. Ltd, a unit of the Zurich-based Kuoni Travel Holding Ltd, clarified on Wednesday that it is not in the race.
Thomas Cook (India) rose 19.91% to Rs.53.9 on Wednesday on BSE. The benchmark Sensex rose 0.48% to 17,707.32 points.
In December, Thomas Cook pledged its entire stake in the Indian unit with the Royal Bank of Scotland Group Plc (RBS). The UK-based company is renegotiating loans with banks and has deferred the reporting of financial results for the September quarter. In November, the Thomas Cook Group said its banks, led by Barclays Plc, HSBC Holdings Plc, RBS and UniCredit SpA, have agreed to provide a new £200 million loan facility until 30 April 2013, which replaces the £100 million loan short-term facility announced on 21 October.
“The new buyer can use the Thomas Cook brand for seven years. The sale is expected to be complete by the middle of May,” said a person close to the development. A senior executive at a leading investment banking firm said the India unit is likely to fetch a marginal premium on the current market capitalization, which stood at Rs.1,142 crore on Wednesday. Both persons did not want to disclose their identities.
After the annual general meeting on Wednesday, Weihagen said Thomas Cook (India) is a strong business operating in an attractive market, adding, “Both the business and market are growing and Thomas Cook will only sell its stake if a compelling offer is received,” he said.
In 2005, Thomas Cook (India) promoters sold the company to Dubai Financial LLC, a part of the Dubai Investment Group. After a year, the Dubai group resold the company to its promoters. The brand and the management of the company were kept unchanged during these transactions.
Thomas Cook (India) reported a net profit of Rs.24.52 crore for the quarter ended 30 September on revenue of Rs.89.5 crore. It hasn’t reported its December quarter earnings. Started in 1881, Thomas Cook (India) is the largest local travel firm dealing with foreign exchange and among the top five tour operators. Its forex business accounts for 60% of consolidated revenue. Thomas Cook operates in 70 Indian cities across 153 owned locations with an employee strength of 2,700.
Foreign tourists arrivals in India during 2011 were 6.29 million with a growth of 8.9%, compared with 5.78 million in 2010, according to the ministry of tourism.
Thomas Cook (India) has businesses including foreign exchange, corporate travel, holiday packages (international and domestic), travel insurance, passport and visa services.
“Thomas Cook (India) has performed much better than the parent company given the fact that India is the fastest-growing outbound travel market in the world,” Sunil Sewhani, an analyst at domestic brokerage GEPL Capital Pvt. Ltd, said in 12 December 2011 report.
Source: Livemint

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