Dubai Financial to buy Thomas Cook India

Dubai firm to acquire 60% stake for Rs 423cr; to make open offer for around Rs 161cr.

The ownership of Thomas Cook (India), a subsidiary of Europe's second largest travel company Thomas Cook, is changing hands.

Dubai Financial (LLC), a subsidiary of the state-owned Dubai Investment Group, will acquire 60 per cent stake in Thomas Cook (India) and will subsequently launch a 20 per cent open offer for minority shareholders.

Informed sources said Dubai Financial had agreed to pay nearly $123 million (Rs 566 crore) for the acquisition.

Of this, $92 million (approximately Rs 423 crore) will be for the acquisition of TCIM UK's 60 per cent stake in Thomas Cook (India) and $35 million (Rs 161 crore) for buying a 20 per cent stake from minority shareholders. Going by this, the open offer can be priced at around Rs 540-550 a share.

The Thomas Cook stock gained marginally today on the Bombay Stock Exchange. It closed at Rs 600 against yesterday's closing of Rs 596.70.

Thomas Cook (India) today informed the stock exchanges that its promoters Thomas Cook AG had entered into a definitive agreement to sell its 60 per cent stake to Dubai Financial (LLC). Thomas Cook AG holds its stake in Thomas Cook (India) through its British subsidiary TCIM UK.

"Dubai Financial has undertaken to float a public offer in accordance with the provisions of the Securities and Exchange Board of India (substantial acquisition of shares and takeovers) regulations, 1997," Thomas Cook (India) also said in its communication to the stock exchanges.

However, Thomas Cook (India) did not mention the price to be paid by Dubai Financial for the acquisition.

In a release issued from Oberursel, Germany, Ludger Heuberg, member of the management board at Thomas Cook AG, said the sale was part of the company's strategy to focus on its core business in Europe.

"Thomas Cook (India) has always produced outstanding results. This is why we have decided in favour of a partner with a clear vision of how Thomas Cook (India) should develop in the future," he added.

Mohammed Al Gergawal, CEO of Dubai Holding and chairman of its parent company Dubai Investment Group said, the acquisition represented a "promising opportunity of entering the strong-growth Indian leisure travel market".

Thomas Cook, which is jointly owned by airline Deutsche Lufthansa and ailing German retailer Karstadtquelle, has been trying to sell its Indian business for quite some time.

Thomas Cook has been present in India for 124 years and operates a total of 60 offices. It has branches in Sri Lanka and Mauritius. The company posted a total sale of Rs 130 crore in 2003-04.