Thomas Cook repurchases control of its brand

The travel and forex operator will pay up to $383 million for its businesses in India, Egypt and the Middle East just two years after selling them to the Dubai Financial Group.
London-listed Thomas Cook Group (TCG) is buying back its businesses in India, Egypt and the Middle East from Dubai Financial Group for Ç208 million-Ç249 million ($320 million-$383 million).

After the acquisition, which TCG plans to fund from its balance sheet, it will once again control its global brand. The acquisition is earnings accretive and meets TCGÆs cost of capital criterion, the firm said in a written statement. The deal is expected to be fully closed by May 2008.

TCG will buy up to 74.9% of its Indian business, the Bombay Stock Exchange-listed firm Thomas Cook India, which has around 180 outlets in 40 cities.

It will initially buy 54.9% of the India business from Dubai Financial at a price of Rs107 ($2.65) per share. Under the Indian takeover code, this will trigger a mandatory offer at the same price for 20% of the outstanding minority shares. TCG said its final ownership in Thomas Cook India will be not less than 61.8% and is capped at 74.9%. TCG will pay between Ç173 million and Ç214 million for its India business.

Thomas Cook India is the largest foreign exchange operator in country following the acquisition of LKP Forex in August 2006 through a share swap. It is also a leading travel company and in December 2006 acquired the Travel Corporation of India to strengthen its position. In 2006, Thomas Cook India had revenues of Ç38.2 million and an Ebitda of Ç12.4 million. It expects to have increased the Ebitda to Ç16.7 million in 2007.

The Indian business is being acquired at a price-to-Ebitda multiple of between 10.3 and 13.9 times at the lower end of the price range and between 12.8 and 17.2 times at the upper end.

TCG will also buy 100% of Thomas Cook in Egypt which comprises 22 branches and operates in the corporate, inbound and outbound travel industry. It is also active within financial services. The acquisition includes licenses for the Thomas Cook brand in 15 countries in the Middle East. The Egypt and Middle East acquisition will be transacted for Ç35 million.

Dubai Financial Group is a subsidiary and the direct investment vehicle of Dubai Investment Group. In January 2006, it acquired Thomas Cook International Markets UK which gave it a controlling interest in Thomas Cook India, Mauritius and Sri Lanka. Specialists reckon it paid around $254 million for the deal, which was one of its first acquisitions in India. Dubai Financial went on to acquire the license for the Thomas Cook brand in the Middle East in August 2006.

In February 2007 KarstadtQuelle, the German retailer who owns Thomas Cook, merged it with British travel company MyTravel to create one of EuropeÆs largest tour operators. Post-merger Thomas Cook was listed on the London Stock Exchange as the Thomas Cook Group. It traded on the London Stock Exchange at ú2.90 ($5.84) on Friday.
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