First Choice Holidays receives bid approach
Tuesday 02 March 1999
First Choice, Britain's third largest tour operator, said the talks were "highly conditional" and that it would make a further announcement in due course. First Choice shares rose 24.5p to 180p, valuing the company at pounds 609m.
Preussag, the German travel group which is taking control of the Thomas Cook travel agency business, has been seen as a possible bidder for First Choice, which only has a small retail presence.
Preussag acquired a 24.9 per cent stake in Thomas Cook before Christmas and will take its holding to 51 per cent by September. "Everyone talks to everyone and it's not clear what they mean by a preliminary approach," a Preussag spokeswoman said.
Thomson Holidays and Airtours could also be interested. But these two companies are already ranked numbers one and two in Britain's travel industry and a bid from either could trigger an Office of Fair Trading inquiry.
Airtours made an unsuccessful bid for First Choice in 1993 when the business was called Owners Abroad. The deal was cleared by the competition authorities but failed when shareholders supported the Owners Abroad management.
A Monopolies and Mergers investigation into the travel industry in 1997 gave the sector a clean bill of health saying it was highly competitive and that further consolidation was likely. That led to a spate of deals last year as the major travel firms had feared they would be forced to sell or reduce the size of their high street travel agencies.
First Choice is third behind Thomson and Airtours in Britain's top three tour operators. It owns the Air 2000 airline and last June acquired Unijet and Hayes & Jarvis, the long-haul holiday specialist.
Analysts, who also mentioned Kuoni as a potential bidder, said there was likely to be keen interest in the business. "There will be a lot of people who want a seat at the table on this one," one said.
First Choice is half-way through a three-year re-structuring programme under Ian Clubb. Last year it reported profits of pounds 50m on sales of pounds 1.2bn.
The company is starting to build up a travel agency business and bought a West Country chain last year. It has also signed a deal with the Co- op.
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