Germans eye up Thomson

Leading German package holiday firms are lining up bids for Thomson Travel, the holidays arm of the Canadian-based Thomson Corporation, which accounts for one in three package holidays sold in the UK.

According to travel industry insiders, German integrated tour operators such as TUI and NUR are keen to diversify into the UK market because it has a longer holiday season than Germany and offers more opportunity for profits growth. But it is believed that they are waiting for a favourable outcome to the year-long investigation of the package holiday business by the Office of Fair Trading - the second in three years - before making their move.

The OFT is investigating concerns voiced by independent tour operators that integrated firms such as Thomson, which owns the Lunn Poly travel agent chain as well as Britannia Airways, and Airtours, owner of the Going Places chain, are not adequately informing consumers of their "vertical" links.

TUI is Europe's largest tour operator, selling DM5.1bn (pounds 2.19bn) of holidays in 1994-95, according to FVW International, a market research firm specialising in the travel industry. Thomson is about half the size of TUI by sales, and is Europe's third largest operator. It made pounds 65m profit last year, down from pounds 90m in 1994.

Thomson, which sold its extensive newspaper interests in the UK earlier this year to concentrate on its electronic information business, has been considering the position of its travel operations for some time. But it has been prevented from entering any meaningful discussions with interested parties by uncertainty over the outcome of the OFT probe.

John Bridgeman, the OFT's director-general, has the power to refer Thomson and Airtours to the Monopolies and Mergers Commission for a more far-reaching inquiry. Both companies have offered concessions to escape the MMC's probe.

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