Thomas Cook, TCI merger called off

MUMBAI, SEPT 21: Yet another high-profile corporate acquisition has fallen through. The Rs 75 crore travel firm Thomas Cook India has an...

MUMBAI, SEPT 21: Yet another high-profile corporate acquisition has fallen through. The Rs 75 crore travel firm Thomas Cook India has announced that its proposed Rs 120 crore merger with domestic inbound tour operator Travel Corporation of India TCI has been called off.

In a communication to the BSE, Thomas Cook said: 8220;The ongoing negotiation has been discontinued and consequently it is unlikely that the transaction will be consummatedquot;. The due diligence was to be completed by October by PricewaterhouseCoopers and the merged entity was to be the largest travel and tour operator in the country.

This is the second unsuccessful attempt by the Thomas Cook to acquire a travel agency after it lost the race to Swiss firm Kuoni in acquiring Sita Travels.

Though no specific reasons have been spelt out for the fall-out, analysts attribute the break-up to the differences between stake-holders of TCI. TCI, besides being owned and managed by the Katgaras was also held by Kotaks and Parikh, who were believed to be averse to the acquisition, unlike Adi Katgara.

Both TCI and Thomas Cook officials were unavailable for comments on Thursday. Thomas Cook is expected to come up with a detailed press release on the event tomorrow.

On Thursday, Thomas Cook scrip at the BSE opened at Rs 380, which also was the intra-day high before touching a low of Rs 364.10 and recovering slightly to Rs 365.85.

Thomas Cook Chairman Pradeep Madhavji had said that the company wanted to expand itself in both horizontally and vertically by going for more acquisition and strategic alliances. 8220;We expect a combined profit of the two companies will double from its current level of around Rs 50 crore,8221; Thomas Cook MD Ashwini Kakkar had announced soon after they made their acquisition plan public. Thomas Cook which gets 60 per cent of its income from the forex transaction was planning to introduce the same service in the 27 offices of the TCI and in turn TCI was to service some 40-50,000 in-bound traffic of Thomas Cook.

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Thomas Cook is also planning to set up branch network in Saarc countries very soon. The other expansions plans of the Thomas Cook includes allied activities such as cruising, hotels, e-commerce business and other activities related tourism. It was also planning to strengthen its foothold in all three segments of the travel business, outbound, inbound and corporate travel. Thomas Cook is 40 per cent owned by Thomas Cook Holdings Ltd and operates through 51 offices in 15 cities. Its core business include leisure travel, corporate travel, foreign exchange amp; travellers cheques, global services and the global credit card.

TCI owns 27 offices at major tourist destinations and cities in India and employs 1,200 staff. Besides, TCI has 12 offices in the US, Canada and South America, Europe, UK, Japan and Australia.

The consolidation process in the travel business started as the tourism industry is likely to attract five million international tourist annually by 2000-2001. Also, the earning from the Indian tourism industry is estimated to go upto 5 billion by 2003, from the 2.9 billion recorded in 1999. This augurs well for the tourism industry in the country and Thomas Cook waspositioning itself to vie a piece of the large cake with the newly acquired synergies.