Thomson Travel set to make pounds 1.5bn market debut

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The Independent Online
THOMSON Travel, the UK's largest tour operator and owner of Lunn Poly travel agent chain, yesterday confirmed plans to come to the stock market, in what would be the biggest flotation of the year so far.

City analysts believe the group will be valued at up to pounds 1.5bn. And to entice customers and private investors to buy shares in the group it plans to offer a package of benefits including discounts on a range of holidays.

Thomson Corporation, the Canadian media giant, has finally decided to hive off the travel group after it became clear that it would have difficulty funding the ambitious expansion of both arms of its business.

Thomson Travel plans to hit the acquisition trail once it comes to the market. It is eyeing up targets throughout Continental Europe where it will come head to head with Airtours, its arch-rival in the UK, which has similar ambitions. The company is also keen to expand its cruise operations.

Paul Brett, chief executive of Thomson Travel, who has lobbied hard for the group's independence said yesterday: "I am very excited. The logic for this deal was inescapable. There would have been a competition for funds at Thomson."

Mr Brett and his fellow directors are likely to buy shares in the new group and will be entitled to a new long-term incentive and bonus package. All of Thomson Travel's 14,000 employees will be able to purchase shares at a preferential price.

Thomson also plans an aggressive push to win market share in the UK by offering more family holidays. However it ruled out a large increase in capacity which lead to heavy discounting and brought the industry to its knees in 1995.

Thomson Corporation is selling the whole travel group but the Thomson family are keen to retain their involvement and are expected to buy up to 20 per cent of Thomson Travel.

Thomson Corporation is expected to use the sale proceeds to continue its conversion from a newspaper company into a publisher of specialist financial information. The decision to float the group has also been prompted by the result of the Monopolies and Mergers Commission investigation into the industry which left travel groups virtually unscathed.

Thomson Travel is also paying pounds 125m to its Canadian parent to take control of Fritidsresor, the troubled Scandinavian holiday group Nordic-region holiday company.

Thomson Travel is a market leader in the UK travel industry. Its tour operating arm served 3.7 million customers last year, accounting for more than a fifth of the pounds 7bn package holiday market. As well as owning almost 800 Lunn Poly shops the group owns Britannia Airways, the UK's largest charter airline and Holiday Cottages, the biggest holiday cottage supplier.

Thomson announced a rise in pre-tax profits to pounds 112.4m from pounds 81.9m, thanks to the buoyant holiday industry and the strong pound.

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