Thomas Cook is close to breaking up after Fosun Tourism from China and also its largest shareholder made a bid for the holiday operations of the company. Struck by low demand for travel packages, hit summer across Europe in 2018 and high debt is considering selling off its airlines branch and operations in Nordic countries, trying to raise more cash. Shares rose around 13% to this news. Final valuation stands at $355 million at the moment. Fosun Tourism is also active in Europe via its Club Med ownership and currently owns over 18% of Thomas Cook. This would be among the most remarkable purchases by a China-based company.
Thomas Cook has 11mn customers last year with £7.4bn in revenue. The airline branch had £3.5 billion in revenue, albeit with higher margins. The heat wave that spread across Europe last year lost most of Thomas Cook’s last-minute demand, thus hurting its profit statements badly. It had been forced to sort out this situation. 3 profit warnings were also issued within a year, forcing it to start raising funds. Condor, which is its airline branch, is currently up for sale as the company looks to gain cash. It wishes to concentrate on resorts and hotels, along with securing stakes in other hotels.
Thomas Cook stated that the current Fosun offer is in no way a final deal. It would be considered among other proposals on its own merits and choose the option with maximum benefits for its shareholders. China is looking to head towards a consumption based economy from an export and investment based one. In view of this, Fosun is purchasing various tourism assets across the world. But its peers have faced increased scrutiny for indulging in big-ticket, debt-fueled corporate deals in the past few years. It intends to reduce asset holding and run Club Med hotels and resorts to be launched in China on a management basis.