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Travelex, PE giants race for Thomas Cook India

The buzz is that the current top management may also come up with a counter-bid

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Thomas Cook had received at least eight proposals from potential buyers, the travel company said on Wednesday, as it closed bids for the sale of its India business. Several private equity and global investment firms, including (KKR), Carlyle Group, Everstone Capital, T A Associates, and Actis, are learnt to be in the race to acquire the 130-year-old company in the country.

Apart from the PEs and investment firms, UK-based Travelex, which calls itself the “world’s foreign exchange specialist”, has put in a bid, according to an industry source close to the development. Also to have placed their expression of interest to buy Thomas Cook India, sources said, were leading gold financing NBFC Muthoot Finance, China’s HNA Group and Bravia Capital of Hong Kong.

The buzz is that the current managers of Thomas Cook may have come up with a counter-bid as well. Thomas Cook India’s managing director categorically denied having any personal involvement in the bidding process or with the potential investors. He also ruled out the possibility of a counter bid by the management team of Thomas Cook India.

SUITORS LINE UP
Wednesday was the last day for bids for Thomas Cook India. The bidders:
PE investors
* Kohlberg Kravis Roberts (KKR)
* The Carlyle Group
* Everstone Capital
* T A Associates
* Actis
A UK-based foreign exchange co
* Travelex
A gold financing NBFC
* Muthoot Finance
A Chinese travel, tourism co
* HNA Group

Industry watchers say prominent Indian travel companies have kept away, since acquiring would not have given them any geographical advantage. “All companies have their own networks,” says P R Srinivas, senior director, Deloitte India. “Private equity firms can sell the business at a later date. Now we have to see how they will leverage the brand.”

The final decision on the bids will be taken by July-August this year, following a two-stage selection process, according to a company official.

Thomas Cook has appointed merchant banking firm Credit Suisse to lock the deal. The company is also learnt to have got on board Trilegal as the legal consultant for the sale process. The law firm was an advisor for the 2007 Vodafone-Hutch deal, among others.

Thomas Cook, which had announced a disposal programme for its non-core assets last year to reduce debt, recently made it known it was in the process of inviting formal bids for its 77.1 per cent shareholding in the India business. The company has had a heritage in India dating back 130 years to 1881. With over 60 per cent market share, it is a leader in the foreign exchange business in the country.

Earlier in 2006, Thomas Cook Plc had sold its stake to Dubai Financial, following a pullout by its two major shareholders -- German airline Lufthansa and Karstadt. Two years later, in 2008, Thomas Cook bought back 54.9 per cent stake in Thomas Cook India from Dubai Financial for Rs 950 crore and a further holding of as much as 20 per cent in an open offer.

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