Fairfax-owned Thomas Cook has acquired Swiss tour operator Kuoni Group's business in India and Hong Kong for about Rs 535 crore as a part of its strategy to scale up the inbound tour business and expand in foreign markets. This is the company's second acquisition in a week. Last week, it acquired Luxe Asia, a destination management company in Sri Lanka.
While travel industry sources say Thomas Cook would become the largest tour operator in both inbound and outbound segments post the deal, senior executives in the company said it was incorrect to claim the number one rank. In FY14-15, Thomas Cook reported standalone revenue of Rs 500 crore and net profit of Rs 33 crore.
In January, Kuoni Group had announced its intention to sell tour businesses in India and other parts of world to focus on online travel, destination management and visa processing services. Initially, the Swiss company planned to retain its destination management business (inbound travel) in India, but even that is being sold to Thomas Cook.
Thomas Cook will run Kuoni's business in India and Hong Kong independently and will take over its 1,800 employees and offices in both the locations.
“The Kuoni brand is licensed to the acquirer for one year in India and for five years in Hong Kong. All other brands such as SOTC, Sita and Distant Frontiers are transferred with the business,” Kuoni said.
Thomas Cook said it will finance the transaction with equity infusion, internal accruals and debt.
Kuoni was founded in 1906 and entered India in 1997 by acquiring SOTC Tours, which was one of pioneers of foreign tours in the country. Three years later, it took over Sita World Travels, a specialist in inbound tours. Sita is said to be the largest inbound tour operators in India and with this acquisition, Thomas Cook can move up to the top rank in the inbound market, a source said.
“Also like other companies, Thomas Cook faces challenges from online travel companies that are growing at a fast rate. This acquisition also allows the company to face the challenge,” the source added.
“Our acquisition of Kuoni’s tour operating and retailing businesses in India & Hong Kong as well as the Indian inbound business reaffirms our belief in the India market potential, as also our strategic intent to explore viable geographies, including the larger Asia opportunity,” said Prem Watsa, chairman & CEO of Fairfax Financial Holding.
The deal gives Thomas Cook the scale and will help in better contracting and improve margins. I would expect the company to focus on high end luxury travel and Kuoni handle the mass tours business,” said Rajiv Duggal, former managing director of Kuoni India.