Tour operator Thomas Cook (India) Ltd said on Saturday it will merge its operations with resort owner Sterling Holiday Resorts India Ltd in a deal valued at Rs 870 crore. This will help Thomas Cook, a tour package and travel related financial services company, get access to a wide selection of resorts in India and also abroad through partners.
Based on equity investments and merger ratios, the aggregate value of the two companies is approximately Rs 3000 crore. The deal will be structured in a multi-stage process in which 100 shares of Sterling will be swapped for 120 shares of Thomas Cook (India), a statement said.
Thomas Cook, owned by Canada’s investment firm Fairfax Financial Holdings Limited, said it will first make a preferential allotment for 23.24 per cent of Sterling at about Rs 190 crore and will then purchase another 23.63 per cent of Sterling for Rs 270 crore.
This will be followed by a mandatory open offer for buying up to 26 per cent stake for Rs 230 crore. Thomas Cook will also have the option to buy an additional 7.2 per cent for Rs 63 crore.
The merger, which is expected to close by the fourth quarter of 2014, will give Thomas Cook access to Sterling Resorts’ 19 properties in 16 holiday destinations across India.
“The synergistic opportunities that this new partnership between Thomas Cook & Sterling Resorts offers are enormous, because they create multiple avenues to grow our respective businesses and to create valuable business opportunities together,” said Madhavan Menon, Managing Director, Thomas Cook (India) Ltd.
“The last few years have seen the resurgence of the Sterling brand in the Vacation Ownership and Leisure Holidays space. The investments we made in designing and delivering best-in-class holiday experiences through renovated and new resorts has yielded results in healthy year-on-year growth in Vacation Ownership sales and Resort Occupancy,” said Siddharth Mehta, Chairman, Sterling Holiday.
Post merger, Sterling Holiday Resorts will continue operations under the leadership of Ramesh Ramanathan with an independent board.
Antique Group acted as advisor and ICICI Securities acted as merchant banker to Thomas Cook for this merger.
Thomas Cook India, which was acquired by Fairfax and its India affiliate Fairbridge Capital in 2012, is the local acquisition vehicle of Prem Watsa’s company. The deal comes exactly a year after Thomas Cook (India) acquired 74 per cent stake in human resources staffing firm Ikya Human Capital Solutions for Rs 256 crore.
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