Thomas Cook Regulatory News (TCG)

7 Mar 2008 07:01

Thomas Cook Group PLC07 March 2008 THOMAS COOK MAKES KEY STRATEGIC ACQUISITION IN INDIA & MIDDLE EAST Supporting its strategy of entering the fast growing emerging markets Thomas Cook Group plc ("Thomas Cook") announces today that it is acquiring up to74.9% of the issued share capital in Thomas Cook India Limited ("TCIL") and 100%of Thomas Cook branded businesses in Egypt, as well as licences for the ThomasCook brand in a total of 15 Middle East countries. Thomas Cook is purchasing thebusinesses from Dubai Financial Group LLC ("DFG") for a total cash considerationof between €208m and €249m, subject to the outcome of the open offer process setout below. Highlights: •This acquisition fully supports the Thomas Cook strategy to expand into emerging markets that represent a great growth potential as well as to strengthen its Financial Services business. •Through acquiring a controlling stake in TCIL, the largest foreign exchange and second largest travel company in India, Thomas Cook will become a leader in one of the fastest growing travel markets. •Thomas Cook is confident that under its ownership the TCIL business will grow significantly in a market that is already growing at 15% per annum. •In acquiring the Thomas Cook branded business in Egypt and the rights to the Thomas Cook brand across 15 Middle East countries, Thomas Cook is substantially strengthening the company's reach in this region. Thomas Cook now has control of the brand worldwide. •This transaction meets the company's acquisition criteria in terms of it being earnings accretive and exceeding the cost of capital. Manny Fontenla-Novoa, Group Chief Executive Thomas Cook Group plc said: "I amdelighted we have secured such a significant acquisition in this fast growingmarket. Thomas Cook has a long and enviable history in India dating back to the1880's and the brand name has become one of the country's best known. Addingwhat is one of India's largest travel and financial services businesses to ourportfolio will allow us to take full advantage of the growth prospects that thismarket offers and fully supports our strategy of entering the fast developingemerging markets and expanding our financial services businesses." TCIL employs about 2500 staff with a total retail network of about 180 outletsacross 40 cities. Approximately half of TCIL's gross revenues are from foreignexchange and the other half are from the travel businesses. In the last twoyears TCIL has significantly expanded its business and strengthened its marketposition by acquiring LKP Forex, its largest competitor in the foreign exchangebusiness, and Travel Corporation of India, an inbound operator. TCIL is now thelargest foreign exchange operator with approximately 50% market share and thesecond largest travel group in the high-growth Indian market. TCIL generated Full Year 2006 revenues of €38.2m, EBITDA of €12.4m and ProfitAfter Tax of €5.9m. Thomas Cook expects Full Year 2007 Profit After Tax inexcess of €8.4m and Full Year 2007 EBITDA to be around €16.7m. Mr. Fontenla-Novoa added: "The acquisition of TCIL allows Thomas Cook tocapitalise on the anticipated strong growth and development of the Indianeconomy, which we expect to be mirrored by even stronger growth in travel. Ihave every confidence that by bringing the TCIL business under our ownershipthere will be significant opportunities for the business to outperform themarket in both the travel and foreign exchange sectors." The Thomas Cook branded business in Egypt offers Thomas Cook strong prospects togrow in this region, particularly through using the Egyptian business's inboundtravel capabilities and strengthening its outbound travel operations. Inaddition, the termination of the brand licensing (and related non-compete)agreement in the 15 countries across the Middle East allows Thomas Cook toregain control of the "Thomas Cook" name it originally licensed to DFG. Thomas Cook's travel and financial services activities in Egypt date back to1869. Today, the branch network includes 22 Egyptian branches in prime locationsacross Egypt. The main business segments are corporate, inbound and outboundtravel as well as financial services. Thomas Cook Egypt generated 2007 Full Year Revenues of €7.4m, EBITDA of €2.0mand Profit After Tax of €1.3m. Under the terms of the TCIL transaction, Thomas Cook has agreed through its UKsubsidiary to acquire at least 61.8% and up to 74.9% of TCIL's share capital. Ina private transaction with DFG Thomas Cook will acquire 54.9% of this for theequivalent of INR 107 per TCIL share. Under local stock market rules Thomas Cookis tendering to acquire up to a further 20% of TCIL shares in an open offer atthe same price per share. As a result of this transaction Thomas Cook willacquire between 61.8% and 74.9% of TCIL's share capital, the price of which willrange from €173m to €214m giving Thomas Cook control of the company. Thomas Cook will pay a cash consideration equivalent to €35m to DFG for both theEgyptian business and the return of the brand licenses in the 15 Middle Easterncountries. The licensing agreement with DFG for the brand in these 15 countrieswill be terminated. Consequently, Thomas Cook will now have exclusive ownershipof the Thomas Cook brand worldwide. The transactions will be funded from the company's strong balance sheet. Theyare expected to close at the end of March and the open offer for up to a further20% stake in TCIL is expected to close at the end of May 2008. Ends For further information please contact: Brunswick Group LLP Tel: +44 (0)20 7404 5959Anita KidgellDominic McMullan For India Media Enquiries please contact: Adfactors Public Relations Pvt Ltd Tel: +91-22-22813565Arwa Husain For Investors and analysts: Thomas Cook management will host a conference call for analysts and investors at08.00 (GMT) on Friday 7 March. To participate, please use the following dial-innumbers: +44 (0) 1452 541 077. A replay of the call will be available for up to7 days on the following number: +44 (0) 1452 55 00 00. The access code for thereplay facility is 38128731#. Notes to Editors 1. TCIL was previously controlled by Thomas Cook AG who sold its 60% controlling stake in TCIL in January 2006 2. TCIL is listed on the Bombay Stock Exchange ("BSE") and the National Stock Exchange of India ("NSE") 3. The Egyptian business was sold in July 2006 by Thomas Cook at which point licences for the Thomas Cook brand for the 15 countries in the Middle East region (including Egypt) were granted to DFG. 4. TCIL's 2006 PBT before exceptional items was €9.5m and the value of the gross assets in 2006 were €68m 5. Thomas Cook Egypt's 2006 PBT before exceptional items was €1.3m and the value of the gross assets in 2006 were €14.0m 6. Market share data and growth rates are based on TCIL internally commissioned reports and projections About Thomas Cook Group plc Thomas Cook Group plc was formed on 19 June 2007 by the merger of Thomas Cook AGand MyTravel Group plc. The new company is one of the world's leading leisuretravel groups with sales of around £9 billion (€12 billion), 19 millioncustomers, 30,000 employees, a fleet of 97 aircraft, a network of over 3,000owned or franchised travel stores and a number of hotels and resort properties.It has operations in four regions: UK & Ireland; Continental Europe (Germany,Austria, Belgium, France, the Netherlands, Poland, Hungary, Slovenia andSlovakia); Northern Europe (Sweden, Norway, Denmark, Finland) and North America(Canada and USA); and German airlines operating under the Condor brand. About Dubai Financial Group Dubai Financial Group (DFG) is the financial holding company for Dubai Group, amember of Dubai Holding. Its core practice is the identification and acquisitionof financial services companies, to build long-term value throughstate-of-the-art governance. Identifying opportunities across the banking,foreign exchange, brokerage and asset management sectors, Dubai Financial Groupreinforces the Group's position as the principal entity mandated to drive itsactivities in the regional and international markets. It has significant stakes in regional and global institutions such as MarfinPopular Bank, Marfin Investment Group, TAIB Bank, Global Investment House, EFGHermes and Dubai Bank. This information is provided by RNS The company news service from the London Stock Exchange