Thomas Cook and MyTravel to merge
Last updated at 11:48 12 February 2007
A global holidays powerhouse
with revenues of almost £8 billion
was created today when Britain’s
MyTravel agreed to a merger with
German-owned rival Thomas Cook.
The combined company - to be
called Thomas Cook Group - will
be 52 per cent -owned by Thomas Cook
owner KarstadtQuelle and 48 per cent by
shareholders of MyTravel.
It will be temporarily run by joint
chief executives Peter McHugh, the
present boss of MyTravel, and his
counterpart at Thomas Cook, Manny
Fontenla-Novoa.
McHugh will leave
the company at the end of this year.
The planned merger brings together
two of the biggest names in
travel.
It will see MyTravel brands
such as Airtours, Going Places and
Direct Holidays added to the Thomas
Cook stable to create a company
with a market value of about £3 billion
and 19.1 million customers,
including 6.3 million in the UK.
The firms said they expect cost
savings of at least £75 million a
year, although Fontenla-Novoa said
it was too early to tell if there would
be job cuts among its 32,000 staff
around the world, 19,000 of which
are in the UK.
McHugh said: “We are very excited
about this. I think it is pretty
clear that it creates quite significant
value for our shareholders. It gives
us a spread geographically across
the world.”
The new company will be based
and listed in London and have market-
leading positions in the UK and
Ireland as well as across much of
Europe and Canada. It will be big
enough to challenge TUI, Europe’s
largest holiday operator.
However,
McHugh said MyTravel and Thomas
Cook were no longer interested in
buying the package holidays business
of First Choice.
First Choice is selling the £500
million arm to concentrate on its
operations providing specialist trips
and activity breaks, such as Sunsail
and Trek America, and has held
talks with both MyTravel and
Thomas Cook in recent months.
In December, MyTravel reported
its first profit for five years.
The package holiday industry has
been hit by rising fuel costs and a
fall in demand as travellers turn to
budget airlines and the internet to
plan their own trips.
MyTravel chairman Michael Beckett,
who will be deputy chairman of
the combined company, said: “This
transaction gives MyTravel shareholders
the opportunity to participate
in the significant value creation
being offered by industry
consolidation. Thomas Cook is a
household name and the joining of
the two groups will create an even
stronger force in this highly competitive
market.”
Thomas Cook chairman Thomas
Middelhoff, who will chair the new
company, said: “We are delighted
to see the merger of two such well established
industry players which
we are sure will achieve significant
value creation for us as shareholders
from this geographically diverse
portfolio of companies.”
Last week, KarstadtQuelle agreed
to buy the 50 per cent of Thomas Cook it
did not own from Lufthansa.
MyTravel shares soared 86p to
324p on the merger news while First
Choice dived 50p to 255p.
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