First Choice strives to save Kuoni deal

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The Independent Online
THE DIRECTORS of First Choice, the holiday group, are to meet institutional shareholders today in a last-ditch charm offensive to persuade them to approve its agreed merger with Kuoni, the Swiss tour operator. First Choice needs 50 per cent shareholder approval for its bid.

First Choice's move follows reports that its principal shareholders are willing to let the bid lapse. They are said to be holding out for a second bid from rival Airtours following a European Commission investigation into the industry, due to report by October.

A First Choice spokesman said yesterday: "No decisions have been made yet. The directors are just going to talk to the shareholders this week."

The bid could be extended beyond its deadline of 1pm on Thursday, he said. An extension of the bid timetable would need approval from the Takeover Panel, however.

Analysts say First Choice's chances of being allowed an extension are dubious given that the offer has already been extended once.

Although First Choice's directors spoke to almost all their shareholders last week, they were barred under Takeover Panel rules from altering the terms of their offer because they were within the closing date.

First Choice may decide to let the offer lapse, creating the opportunity for Kuoni to agree a merger on more favourable terms for First Choice shareholders. Alternatively, it would allow another holiday operator to enter the fray.

Ironically, First Choice may have done its proposed merger with Kuoni no favours by issuing an upbeat trading statement last week. With First Choice trading well, its shares are less likely to suffer a fall should the Kuoni deal fall through. The statement also confirms the group's attraction as a bid target in the consolidating travel industry.

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