| Journal: TWUK | Section: |
| Title: | Issue Date: 22/05/00 |
| Author: | Page Number: 1 |
| Copyright: Other |
Board moves to change shape of travel industry
Preussag/Thomson and First Choice/Royal Caribbean deals are just the start
Airtours tie-up with C&N expected next
Report by JEREMY SKIDMORE
A RAFT of deals involving the UK’s top companies will lead to the biggest changes in the history of the travel industry over the next six months.Royal Caribbean Cruises’ £200m investment in First Choice and Thomson Travel Group’s takeover by German giant Preussag (see pages 2 and 3) are just the beginning, according to industry analysts.
The UK’s top operators are desperate to join forces with other suppliers at home, in mainland Europe and the US so that they can increase passenger levels, improve margins and consequently increase profits.
Companies refused to discuss their next moves but analysts predict Airtours will either take over or form an alliance with Germany’s C&NTouristic, which failed to acquire Thomson. They also expect Carlson will increase its stake in Thomas Cook and form a three-way alliance with Kuoni.
Analysts predict the four main European groupings by the end of the year will be:
nPreussag/Thomson:this is a virtual certainty as Thomson’s board has unanimously accepted Preussag’s 180p a share offer. A higher bid is unlikely. Only European Union regulatory authorities could thwart the deal.
n Airtours/C&N: the deal is logical for both sides after C&Nlost the race for Thomson. But a sticking point could be that Airtours would want control. Airtours recently admitted it was in talks with Germany’s LTU but C&N is a bigger prize. The UK company has already sold its 2.5% shareholding in First Choice for just over £13m.
“This is not big money for Airtours but it shows the company is not interested in small investments,” said one analyst. “It is getting its house in order in preparation for a far bigger move.”
nCarlson/Thomas Cook/Kuoni:Carlson has already said it wants to increase its 22% stake in Thomas Cook after Preussag signalled its intention to dump the company in favour of Thomson. As a US company, Carlson could not own more than 49% of Thomas Cook’s airline and a three-way deal with Kuoni would be a natural fit.
“Thomas Cook and Kuoni are both great brand names going after a similar clientele,” said another analyst. “It’s a good fit, backed by the US muscle of Carlson.”
nFirst Choice/Royal Caribbean:Royal Caribbean’s 20% stake in First Choice makes the UK operator less vulnerable to a European takeover but more deals for the group are expected.
One analyst warned that although the deals were good for shareholders, they could have a detrimental effect on consumers and employees in the long term.
“Some of the smaller companies will definitely be squeezed out because they will not be able to compete with these giants,” he said.
“And when companies join forces, there is duplication so jobs will go. Consolidation will lead to redundancies and possibly travel agency closures as companies try to get more business via digital television and the Internet.”n See News, pages 2 and 3; Comment and Analysis, page 8; Columnists, page 11; and Cutting Edge, page 74
Takeover game:the main players in the industry are all preparing to do deals to increase their influence in Europe and the US