Thomas Cook serves up its India biz for sale

Cox & King's, Japan Tourism, Travelex and Carlyle may show appetite for travel or forex part of the business

Thomas Cook India, a profitable and high-growth centre of the debt-ridden UK-based travel conglomerate, is up for sale. Thomas Cook, which had announced a disposal programme for its non-core assets last year to reduce debt, on Wednesday made it known it was in the process of inviting formal bids for its 77.1 per cent shareholding in the India business.

Just about a month ago, Thomas Cook India managing director Madhavan Menon had dismissed the sale buzz as mere speculation. On Wednesday, he refused to comment on the matter, citing a silent period ahead of the company’s financial results.

Thomas Cook India group’s 77 per cent shareholding at on Wednesday’s price is valued at Rs 879 crore. The company has had a presence in India dating back some 130 years to 1881. With over 60 per cent market share, it is a leader in the foreign exchange business in the country.

Travel company Cox & King’s, Japan Tourism Bureau, forex player Travelex, and private equity firm Carlyle are among the companies learnt to have shown interest in the Thomas Cook business in the country. Some of these companies may opt for just one part of the Thomas Cook business — either travel or forex.

THOMAS COOK INDIA’S ACCOUNT BOOK

Rs 185 crore
Revenue in Apr-Sept 2011

Rs 46.91 crore
Net profit in Apr-Sept 2011

Rs 5.4 crore
Dividend paid to promoters in 2010

1.2 million
Foreign exchange transactions in 2010

50% Foreign exchange business market share 

TRAVEL M&A DEALS

2006
Thomas Cook India acquires Travel Corporation of India for Rs 182.45 crore 

2000
Kuoni acquires SITA World Travels (estimated deal size Rs 172 crore)

1997
Kuoni acquires SOTC

The debt-ridden travel company’s India check-out plan sent its stocks up almost 20 per cent. Analysts explained investor sentiment improved after the company said it had got many unsolicited offers for buying into Thomas Cook India, more into foreign exchange transactions than travel bookings. The company’s functioning in India is a departure from that of its UK business, as foreign exchange and outbound travel make up for its core business here. Foreign exchange for the parent company is a non-core business.

Last year, the group announced plans to sell non-core assets worth £200 million in six to 18 months to reduce debt. In order to lower debt, Thomas Cook also agreed to sell its chain of hotels in Spain to raise cash. It also decided to sell its office property in Netherlands towards the same goal.

Earlier in 2006, Thomas Cook Plc had sold its stake to Dubai Financial as its two major shareholders — German airline Lufthansa and Karstadt — pulled out.

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.

The company, holding its annual general meeting at its London headquarters on Wednesday, said it received a number of unsolicited informal expressions of interest from third parties to acquire its stake in Thomas Cook India Ltd (TCIL) and, as a result, decided to formalise the process.

“If the offers are attractive, then we will consider selling our stake and using the proceeds to continue to strengthen the Group's balance sheet,” said Sam Weihagen, Chief Executive of Thomas Cook in a formal statement. The statement was sent to the Indian stock exchanges, too.

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