German firm swallows Thomson for £1.8bn

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The Independent Online

Europe's largest package tour provider, Germany's Preussag AG, has confirmed that it will buy British firm Thomson Travel Group PLC for £1.8 billion, beating out a German competitor that had also been vying for a takeover.

In a statement, Preussag said Thomson's board of directors had already accepted the bid - which values Thomson at 180p a share - and has decided to recommend shareholders approve the takeover.

Rumors of the merger had pushed Thomson shares up 13 percent to close at 162 pence.

The deal thwarts efforts by C and N Tourist AG, Germany's second largest tour operator, to acquire Thomson, Britain's No. 1 travel company. C and N had reportedly offered Thomson £1.6 billion after raising its offer last week.

C and N wanted a deal with Thomson to give it market presence in Britain and catapult it past Preussag to the top of the European travel sector, which has seen radical consolidation over the last couple years.

Still, control of Thomson, which has struggled over the past year with sagging profits, could prove difficult for Preussag.

Thomson's shares, which were valued at 170 p at its listing in 1998, sank below 100 p late last year when Thomson said it expected lower earnings after a weak summer season.

To stem off competition scrutiny by European authorities, Preussag said it would sell its 50.1 percent stake in Thomas Cook Holdings, another British travel company.

The battle for control of Thomson began in April, when C and N approached the company over a possible £1.3 billion offer. That bid was rejected, as was a later sweetened bid of £1.45 billion.

It is believed that C and N, jointly owned by German airline Lufthansa and retail and holiday group Karstadt Quelle, will not get involved in a bidding war with its larger German rival for Thomson.

Founded by media tycoon Lord Thomson in 1965, Thomson Travel holds around 24 percent of the British holiday market.