Inspirations shares lifted by bid talks

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The Independent Online
Inspirations, the troubled package tour operator which has seen its shares collapse since two profits warnings late last year, said yesterday that it was in talks that may lead to an offer.

The likely bidder is thought to be Carlson, the US travel group which manages the 97 travel agents owned by Inspirations. Carlson already owns the AT Mays travel agency chain and analysts said a bid for Inspirations would provide the US group with a foothold in the UK tour operation sector.

Inspirations said the talks had been going on "for some time" with market sources giving three months as the timeframe. However, it said the offer was unlikely to be made above the market price, which closed a penny higher at 80p yesterday. The shares were as high as 90.5p earlier in the day.

Some City analysts said the bid price could be as low as 60p per share. They said June was an unusual time for a holiday company to consider a cut-price deal as the industry's finances are usually at their most robust at this time of year. The cash for summer holiday bookings has been banked while payments to hotels and other expenses have yet to be made in full. The timing of the deal would appear to suggest that Inspirations' finances are in a poorer state than previously thought.

Analysts said the proposed price of the deal would be a disappointment to shareholders. However, Bruce Jones of Merrill Lynch said Carlson could use its financial clout to expand Inspirations operations. "Does Carlson want to challenge First Choice for the number three position in the market?" he asked.

The deal would value Inspirations at around pounds 25m. It would provide a windfall for company's management, who own around 40 per cent of the shares. The largest individual shareholder is the company's founder and chief executive, Vic Fatar, who owns 3.3 million shares in the company. These would be worth pounds 2m at the current share price. Paul Jackson, the finance director, owns 2.7 million shares, which would be worth pounds 1.6m.

Inspirations was founded by Mr Fatar, who had also founded Sunmed Holidays which was later re-named Redwing Holidays. It floated on the USM market at 100p in 1993. After a period of drift they rose to a high of 150p last September but were devastated by two profits warnings in six weeks.

The first came in October when the company said peak-season flight delay could cost it up to pounds 10m. The problems arose at its Caledonian Airlines subsidiary, which left holidaymakers stranded at airports. The second came the following month when it said the cost could push it into a loss of pounds 13m for the year compared with a profit of pounds 7.7m the year before. The company also passed on the dividend.

Inspirations is Britain's third largest quoted package holiday company after Airtours and First Choice. In February it said its winter passenger volumes had increased by 12 per cent while the retail division was substantially ahead of the same period last year.