Airtours launches pounds 852m hostile bid for First Choice

AIRTOURS YESTERDAY launched an pounds 852m hostile bid for First Choice Holidays in a move which would create Britain's leading holiday company and potentially trigger an all-out bid battle in Britain's cut-throat travel industry.

Airtours' bid for First Choice would give the combined company 34 per cent of Britain's package holiday market, ahead of Thomson Travel which has 25 per cent.

Thomson has repeatedly said it would defend its market leadership vigorously and said so again at its annual meeting yesterday. "We have been market leader in the UK for the past 25 years and have no intention of surrendering this position," Thomson's chairman Michael Brown told shareholders.

The bellicose remarks fuelled speculation that Thomson will launch a rival bid for First Choice, if only as a spoiling tactic to delay the issue in a lengthy competition inquiry

First Choice is already in the midst of a pounds 1.5bn agreed merger with Kuoni, the upmarket Swiss tour operator. Yesterday First Choice said the Airtours bid "raises significant competition issues" which would eventually scupper the deal.

The all share bid from Airtours, which unsuccessfully bid for First Choice in 1993 when it was called Owners Abroad, is pitched at 229p per share. This is a 54 per cent premium to the implied price of First Choice shares in the Kuoni bid.

Airtours' bid has already received acceptances or indications of support from 43.7 per cent of First Choice shareholders. Of these, 29 per cent are irrevocable. This figure includes the 10 per cent stake held by Thomas Cook, which blocked the last Airtours-First Choice bid when it acquired a "White Knight" blocking stake.

Analysts said Thomson could possibly launch a bid of up to 250p per share, valuing First Choice at nearly pounds 940m.

Thomson backed up its sabre-rattling rhetoric with the launch yesterday of an aggressive price campaign and an increase in holiday capacity for next year. The move sent shock waves through the sector, which has only recently recovered its reputation for stability after woefully misjudging demand in 1995.

Thomson's shares closed 24p lower at 130.5p while Airtours share also fell , by 27p to 431p. First Choice shares rose 7.5p to 200.5p, some way below the level of the Airtours offer.

Airtours said it was confident that its bid would not fall foul of the regulatory authorities. It claimed the UK market share of the combined group would be "only" 25 per cent. It added that it expected the bid to be scrutinised by the regulatory authorities in Brussels rather than the UK's Office of Fair Trading and that it would receive "fast track" clearance in 6-8 weeks. "We believe we have got a very good chance of achieving competition clearance" said David Crossland, Airtours' chairman.

Airtours believes it will achieve annual cost savings of pounds 35m from the deal. These will be achieved through the combination of head offices and administrative functions.

The deal was criticised by independent tour operators and smaller travel agents who complained the merger would create an effective duopoly within the UK travel industry. Airtours admitted the deal would not lead to lower holiday prices.

The terms of the Airtours offer are one new Airtours share for every two First Choice shares held.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
filmPoldark production team claims innocence of viewers' ab frenzy
Life and Style
Google marks the 81st anniversary of the Loch Ness Monster's most famous photograph
techIt's the 81st anniversary of THAT iconic photograph
News
Katie Hopkins makes a living out of courting controversy
people
News
General Election
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Ashdown Group: Head of Client Services - City of London, Old Street

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders