China’s Fosun International Ltd (復星國際) has bought a 5 percent stake in Thomas Cook Group PLC, deepening its foray into Europe’s tourism sector and potentially helping the British company to compete with travel leviathan TUI Group.
Fosun paid ￡91.9 million (US$140.1 million) for the Thomas Cook stake and will seek to double its holding in the world’s oldest travel group to 10 percent, it said in a filing to the Hong Kong Stock Exchange yesterday.
News of the investment sent shares in Thomas Cook soaring 15 percent to ￡1.39, their highest level for about six months.
Thomas Cook said in a statement that it expects the deal to boost its earnings in the fiscal year to Sept. 30 next year, assuming plans under the partnership are implemented this year.
One of the plans is to explore collaboration opportunities with Club Mediterranee SA, the French holiday company it bought last month, where Fosun is looking to turn around a business struggling in Europe and move more aggressively into fast-growing markets such as China.
“The investment in Thomas Cook complements other recent investments of the group in the sector, providing opportunities for further value creation,” Fosun chairman Guo Guangchang (郭廣昌) said in the filing, adding that there is increasing demand for international leisure travel.
Fosun tourism and commercial group president Qian Jiannong (錢建農) told reporters that the group does not plan to use the investment as a first step toward acquiring Thomas Cook in its entirety.
Meanwhile, Thomas Cook said the deal would help to accelerate its plans to develop more specialized hotels and would aid expansion in China over the medium term, as the pair develop hotel brands tailored to the Chinese market.
That could improve Thomas Cook’s ability to compete against the world’s biggest tourism and leisure company TUI Group, which was formed in December last year after the merger of London-listed TUI Travel and German majority owner TUI AG.
Global mergers and acquisitions in the tourism industry more than doubled in value last year as low borrowing costs and growing competition fueled the busiest year in seven.
Fosun’s purchase of the Thomas Cook stake, in the form of a new share issuance at ￡1.2559 a share, is being undertaken by Fosun’s Portuguese insurance subsidiary Fidelidade-Companhia de Seguros.
The price represents a 4.1 percent premium on Thomas Cook’s closing price on Thursday.
Thomas Cook is in the middle of a cost-saving plan, but aims to grow this year, despite tough trading conditions in mainland Europe. It made a loss of about US$80 million in the three months to Dec. 31 last year.
Fosun’s bid for Club Med, which valued the company at about US$1.15 billion, was finalized early last month after Italian businessman Andrea Bonomi’s Global Resorts SAS declined to raise its offer.
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