Kuoni bid for First Choice backed by Cook

THE PROPOSED takeover of First Choice Holidays by the Swiss group Kuoni received an 11th-hour fillip yesterday when the second-largest shareholder pledged its support for Kuoni.

Preussag, whose Thomas Cook unit has a 10-per-cent stake in First Choice, was one of the first companies to signal acceptance of Airtours' hostile bid for First Choice. In a statement Preussag said Thomas Cook withdrew its support for Airtours after the European Commission expressed doubts about competition aspects.

John Donaldson, chief executive of Thomas Cook, said: "We now feel the Kuoni offer, which is the only deal currently on the table, represents the best value."

Airtours' original pounds 950m hostile takeover bid lapsed last month after the European Commission said it was investigating competition issues. However, Airtours has cleared the way for a fresh offer for First Choice if the commission approves the bid in October, and analysts say a number of institutions would be prepared to wait that long.

Last night both sides were lining up to claim victory, with the Airtours camp declaring that PDFM, which holds more than 30 per cent of First Choice, had pledged not to support the Kuoni bid.

A source close to Airtours said: "Despite the prolonged campaign by First Choice, and even with Preussag's support, things are looking very bad for the Kuoni proposal."

But another major shareholder swung behind First Choice. "The First Choice management team has done very well for shareholders and is deserving of support.

"The bottom line is that there isn't an Airtours bid. The Kuoni bid is the only one on the table," he said.

First Choice will announce later today whether it has secured sufficient shareholder support to ensure the Kuoni deal goes through.