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Thomas Cook India Acquisition – Who will it be?

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Thomas Cook India has been a household Indian name since 1881 for forex and other travel services such as corporate travel, international and domestic holiday packages, Passport / visa services etc. Currently, this travel giant operates in 78 Indian cities at 209 locations. Thomas cook currently employs over 2,700 people across its Indian offices and also runs offices in Mauritius and Sri Lanka. A subsidiary of Thomas Cook Group plc UK (TCG), Thomas Cook India has won a host of awards for excellence in travel services, the most recent being the ‘Most Trusted Tour Operator’ at the Times Travel Honours Event in 2011. The company was also accredited with the P1 rating. This is the highest financial rating given by Crisil, according to the official Thomas Cook India website.

Thomas Cook

Thomas Cook Plc (UK) announced in February 2012 that they were receiving a lot of interest by third parties to buy stakes in the Indian unit. This initiated a formal sales and bidding process in India. TCG holds a 77.1% stake in the Indian unit and has decided to sell the same to reduce their debt. In India, controversy and speculation amongst the bidders included names of Bain Capital Advisors (India) Pvt. Ltd, Kohlberg Kravis Roberts (KKR) India Advisors Pvt. Ltd, Actis Advisors Pvt. Ltd, Travelex, Carlyle Group, Chinese firm HNA, Cox and Kings India Ltd, Hong Kong’s Bravia Capital, TA Associates, Everstone Capital and Kuoni Travel (India) Pvt. Ltd.

Credit Suisse, Thomas Cook’s advisory on the auctioning process, shortlisted five contenders out of the above list for the bidding process, namely Kohlberg Kravis Roberts (KKR) India Advisors Pvt. Ltd, Travelex, Carlyle Group, Fairbridge Capital and a Japanese travel agency, TOI reported.

The breaking news on this bid is that Tata Capital, the financial services division of the Tata Group has also emerged as a contender to buy Thomas Cook’s Indian unit. ET is estimating that since Tata Capital has been showing interest in expanding its forex and travel cards business since a while, it is likely to scale out its operations through acquisition of the forex business of Thomas Cook India. The forex section of Thomas Cook India contributes to 65% of the company’s revenues.

What’s in for the successful bidder?

ET reported that the all the shortlisted bidders must give their offers by the second week of April 2012. The highest bidder emerging out of the lot will be granted exclusivity for 4 to 6 weeks so that they can carry out due diligence and formalities for the sale. The deal will be finalized at a discount to the market price and the successful bidder will be allowed to use the Thomas Cook’s existing brand name for a minimum of 7 years. Bids have ended up coming in the range of Rs 50-60 a share according to various media reports.

Here’s a quick timeline of Thomas Cook India major operations.

  • 2000 – Travelex bought Thomas Cook’s worldwide forex business and has been showing interest in acquiring the India unit since then.
  • 2006 – Thomas Cook India purchased LKP Forex to scale the forex business.
  • 2006 – Thomas Cook India was sold to Dubai Financial for 70 million dollars after two of its main stakeholders Lufthansa and Karstadt pulled out.
  • 2008 – The Indian unit was bought back for 300 million dollars.
  • 2012 – Thomas Cook India is up on sale again.

What’s enticing all these players to set shop in the dynamic Indian marketplace? Obviously, the growing tourism industry in India and the increasing upper middle class with disposable income who can afford these travel services. End of April-May 2012 will tell us who Thomas Cook India went to.

Do you want to take a guess, who will that be?

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