THE PROPOSED merger between Kuoni and First Choice would create one of the largest long-haul tour operators in Europe allowing it to take advantage of industry consolidation, the companies have told shareholders.
The are planning to merge and form a new joint company, Kuoni Holdings, valued at £1.5bn. Kuoni would take at 53% stake in the venture and First Choice 47%.
The offer document, sent out to convince those with a stake in either companies of the merger, said Kuoni Holdings would have sufficient financial and managerial strength to capitalize on the frenzied takeovers and buy-outs the travel trade has seen recently.
It expects to establish strong positions in Austria, Canada, Denmark, France, India, Ireland, Italy and the Far East.
The document explains how the new company plans to increase the amount of products offered across Europe using Kuoni’s geographical spread and First Choice’s marketing skills.
Other benefits underlined include improved aircraft use and load factors by expanding airline capacity across a larger market and flying more in the merged group’s own Air 2000 aircraft rather than that of third parties.
The portfolio of brands, listed below, have also been earmarked for further development.
The literature explains how Kuoni Holdings will benefit from First Choice’s extensive distribution plans and talks of “further growth in tour operating markets from enhanced retail distribution in the UK, both through the rapidly expanding First Choice retail network and through growing direct sales operations.”
First Choice recently announced plans to build a retail network with the equivalent of 1,200 shops by the end of 2000 under the branding Travel Choice. It also sells through west country agency Bakers Dolphin and Intatravel, which will be rebranded. First Choice also has 31 shops within Adsa under the branding Travel Choice Express.
The document claims the new company would have increased purchasing power and efficiencies through cost savings, could manage seasonal capacity better, and would probably escape investigation by the competition authorities.
Current trading figures for Kuoni and First Choice released to shareholders show both companies have improved their performances for January to March 1999 compared to the same period last year. Kuoni reported its turnover for the first quarter of 1999, up 12%. First Choice bookings for the winter 1998/1999 programme are 4% higher than last year across its UK businesses, with 97% of the programme now sold.