Further acquisitions and growth in online sales and dynamic packaging could all be on the cards following the merger of Thomas Cook and MyTravel.
KarstadtQuelle AG chairman of the management board Dr Thomas Middelhoff, the current owners of Thomas Cook which will own 52% of the newly formed Thomas Cook Group following the deal, said the share-only deal means cash is available for spending.
“The strategic focus is on strong business and we will also work on the active consolidation of tourism groups across Europe,” he said at a press conference this morning. “The board is convinced that tourism as a market is an emerging trend at the moment; we have the money for further mergers and acquisitions.
“We have to have constant investment in new developments and markets, for example online and dynamic packaging sales.”
The merger will give KartstadtQuelle AG a bigger stake in the European market, Thomas Cook operates in Germany and the UK, while MyTravel offers an in-road to Scandinavia as well as further strengthening the position in the UK market.
The Thomas Cook Group will be headquartered in the UK and listed in London and initially Thomas Cook AG chairman and managing director Manny Fontenla-Novoa and MyTravel chief executive Peter McHugh will be its co-chief executives until the end of this year when McHugh will stand down, leaving Fontenla-Novoa solely in charge.
The merged company will combine Thomas Cook AG’s 33 tour operating brands, 2,400 travel agencies, 66 aircraft and almost 20,000 staff with MyTravel’s 17 brands, 31 aircraft and 13,000 staff worldwide.
MyTravel handled 5.5 million holidaymakers in 2005-06 and made a pre-tax profit of £44 million, while Thomas Cook AG is the second largest European travel group after TUI. Thomas Cook UK & Ireland made a profit of more than £87 million in the last financial year.
MyTravel and Thomas Cook believe that the annualised pre-tax cost benefits arising from a combination of the businesses will be at least £75 million a year once the full benefits of the merger are realised.
The deal is subject to clearance by relevant competition authorities and is conditional on the sale of Lufthansa’s 50% holding in Thomas Cook to German department store group KarstadtQuelle. The board of MyTravel will unanimously recommend the merger.