C&N set to raise offer for Thomson

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The Independent Online

The German holiday firm C&N Touristic is set to raise its bid for Britain's Thomson Travel in a move that analysts say could lead to an agreed deal.

C&N is thought to be on the verge of tabling an offer of at least 155p per share which would value Thomson at £1.55bn-£1.6bn. Thomson shares closed 10p higher at 143p yesterday.

The joint owners of C&N have been holding board meetings in the last few days to approve their next step. The board of Lufthansa, which controls 50 per cent of C&N, met last week. The board of Karstadt, which owns the other 50 per cent, met yesterday. A formal bid is expected either today or on Monday.

However, institutional investors in Thomson warned yesterday that an offer of 155p may fail. One leading shareholder in Thomson said: "I would have thought that 150p would be rejected, 160p would be accepted and 155p would be right on the edge. This deal is obviously quite strategic for them [C&N] and if they are too tight they could lose it."

The fund manager highlighted the example of Lafarge's bid for Blue Circle Industries, which failed after the French building materials group pitched its offer too tightly. "People are not rushing to exit Thomson," another fund manager said. "They are quite happy to sit there."

Some analysts said Airtours' ambitions to expand in Germany may spur C&N to raise its offer for Thomson to closer to 160p in order to clinch it. Airtours is in talks with SAir of Switzerland about the group's German travel interests.

C&N has already had indicative bids of 130p and 145p per share rejected by Thomson. However, some analysts said 155p could be enough. "I would have thought commonsense would prevail and a deal would be struck at that kind of level," one said.

It is understood that C&N has been in touch with Thomson's advisers over the last few days over the improved terms. The German group has said all along that it would prefer an agreed deal. It has virtually ruled out going hostile, saying an aggressive move would cause too much damage to the Thomson business.

Thomson shares were priced at 170p per share when the company came to the stock market two years ago. But the company has struggled in the face of stiff competition and strategic blunders, which included a threat to flood the UK market with cheap holidays when Airtours launched an ultimately unsuccessful bid for First Choice Holidays.

Under Charles Gurassa, Thomson's new chief executive, the company has started to recover. He has said he would not even come to the negotiating table with C&N if the offer was less than 150p per share.

The Thomson family holds a key stake of 23 per cent in the company. Around 500,000 small shareholders own around 20 per cent. Many were lured in by the promise of discounted holidays for founder shareholders.

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