First Choice and Kuoni in pounds 2bn merger talks

FIRST CHOICE Holidays yesterday caught the City off guard with an announcement that it is in "advanced merger talks" with Kuoni, the Swiss tour operator.

The statement, issued just after the stock market closed and while the Chancellor was still delivering the Budget, will create a new pounds 2bn player in Europe's travel industry. A statement finalising the deal is expected within the next few days.

First Choice announced last week that it was in preliminary merger talks. Attention then focused on Airtours and Preussag of Germany, and it is possible that these companies could yet enter the fray with a hostile bid.

The new group would be called Kuoni Holdings with Ian Clubb, the chief executive of First Choice, becoming executive chairman. Kuoni's Riccardo Gullotti would be chief executive. The company's board would include 14 directors drawn from both businesses, and it would be listed on the London and Swiss stock exchanges.

Under the terms of the deal, First Choice's main brands will be retained. These include Sovereign and Twenties, as well as Unijet and Hays & Jarvis, both acquired last year.

First Choice, which is Britain's third-biggest holiday company behind Thomson and Airtours, would move into second position in the UK market, with a market share of around 18 per cent. Mr Clubb said: "We are delighted with the deal. We don't expect any competition problems."

Kuoni is Switzerland's biggest tour operator and has built a reputation for providing up-market, longer-haul holidays with margins double those on mass-market packages.

Under the terms of the merger being discussed, Kuoni shareholders would own 53 per cent of the enlarged company, and First Choice shareholders 47 per cent, the companies said.

"Kuoni and First Choice would be a unique combination that would benefit shareholders, customers and employees of the two groups,'' said the companies in a statement. The companies declined to comment on the implication for jobs.

The discussions come as European tour operators pair up to increase their buying power for hotel accommodation and double up on transportation to and from resorts.

First Choice owns package-tour companies and the Air 2000 and Leisure International charter airlines. It is more than half way through a three- year reorganisation to push pre-tax profit to 4 per cent of sales by October 1999.

First Choice had pre-tax profit of pounds 50m ($80.5m) in fiscal 1998. For the year ended 1997, Kuoni had pre-tax profits of pounds 56.6m.

PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
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

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world