|Club Med, a Chinese company comes to the rescue of the 178-year-old British tour operating business. Club Med expressed interest in buying Thomas Cook with an aim to expand it in Asia. Fosun, an investment company with health, leisure and financial interests, bought Club Med in 2015.|
On Monday, Thomas Cook confirmed that it is discussing a sale with Fosun International, a Chinese conglomerate, though it has not been revealed if talks would lead to a formal offer.
The company released an official statement saying, “There can be no certainty that this approach will result in a formal offer. However, the board will consider any potential offer alongside the other strategic options that it has, with the aim of maximising value for all its stakeholders.”
The rumours of travel group putting some or all of its ailing business on sale first emerged in April, after it released two separate profit warnings in 2018.
Fosun, which is in joint venture with Thomas Cook, first invested in the company in 2015 and owns the largest share in the company with an 18% stake.
The British travel company, which provides holiday packages along with airlines and hotels, has been struggling with diminishing demand and increasing debt. The company was fighting for survival and was under the burden of a £1.25bn debt. The company’s shares also were down 84% in the past year, though its stock shot higher after Monday’s announcement. Thomas Cook’s market value is only about £250 million ($317 million).
If the deals comes through, Fosun would benefit the most out of it. It would bolster Fosun’s expertise in managing hotels and resorts. And the British legacy brand has cachet in China, which has grown into the world’s largest travel and tourism market.
It carries] a badge of quality or heritage that tends to resonate quite well,” said Richard Clarke, an analyst at Bernstein.
The company was founded in July 1841 by a 32-year old cabinet maker, Thomas Cook, who offered a one-day rail excursion at a shilling a head from Leicester to Loughborough. From there, it went on to become one of the world’s largest holiday companies.