Thomas Cook surges after it confirms Fosun offer

LONDON/HONG KONG • Thomas Cook Group shares and bonds surged after the troubled British tourism group confirmed it received an offer for its tour operator business from Chinese investor Fosun International.

Hong Kong-listed Fosun, already Thomas Cook's biggest shareholder with a stake of about 18 per cent, has submitted a preliminary approach and talks are under way, the British company said yesterday.

Shares of Thomas Cook, the world's oldest travel agency, rose 21 per cent in London, while its bonds posted their biggest gain on record.

Fosun's tourism arm is a division of billionaire Guo Guangchang's pharmaceuticals-to-insurance conglomerate, which owns the luxury resort brand Club Med. Its stock jumped 3.8 per cent in Hong Kong yesterday, the biggest gain since March 29.

Thomas Cook has been grappling with dwindling bookings and uncertainty related to Britain's departure from the European Union.

Selling at least part of the operation is crucial to its survival because a new £300 million (S$520 million) loan announced last month is conditional on making progress with a disposal.

An acquisition of Thomas Cook's tour operations would help the Chinese company gain control of a business that serves 11 million customers and reported £7.4 billion in revenue last year.

Thomas Cook said there is no certainty of a formal offer from Fosun. Its board will consider any proposal alongside "the other strategic options" that the company has, it added.

The British firm needs to maintain consumer confidence to avoid any further weakness in bookings and hotel partners tightening their payment terms, Citigroup said in a recent report.

A deal could also benefit from booming travel demand out of China. Mainland travellers completed 150 million visits overseas last year, almost 15 per cent more than in 2017, according to official data.

In 2016, Thomas Cook and Fosun set up a travel agency partnership to cater to the wealthiest 20 per cent of tourists.

Fosun Tourism chairman and chief executive Qian Jiannong said last month that acquisitions as well as organic growth would be part of the company's business model.

"We do believe we have synergies with this company because the European market is still the largest in the leisure holiday business," he said of Thomas Cook last month.

"If you combine the market of these two continents together, it will make a very, very interesting business."

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A version of this article appeared in the print edition of The Straits Times on June 11, 2019, with the headline 'Thomas Cook surges after it confirms Fosun offer'. Print Edition | Subscribe