A week on from the official announcement of the First Choice/Kuoni merger and the possibility of a rival bid for the short-haul operator is growing.
First Choice needs a deal and the tie-up with Kuoni certainly makes a lot of sense. If First Choice did not do some sort of tie-up, it would effectively go backwards as the majors expand throughout Europe.
But would a different deal make more sense as some in the city are predicting?
Certainly a rival bid would be better for First Choice shareholders which want a short-term gain because a bidder would be expected to offer around ú2 a share.
It may also be a better long term bet for shareholders, although that is harder to predict. For Airtours or Thomas Cook the benefits of making a bid are considerable (see Analysis, right).
But the market and holidaymakers will probably want a First Choice/Kuoni merger. The influence in the market is spread between more players and consequently competition will be hotter.
Thomson’s pole position in the UK will not be under threat from the planned merger, hence the recovery in its share price when the deal was announced.
Possible bidders are watching carefully before deciding whether to make a move, but don’t assume the First Choice/Kuoni deal is done and dusted just yet.
Jeremy Skidmore – editor