Thomas Cook shares surge after reported takeover bids
Thomas Cook shares have surged following reports that a number of potential suitors are eyeing a takeover of the company.
Shares jumped 17% to 28.5p in early trading on Tuesday after Sky reported over the weekend that several potential bidders have been circling the UK’s oldest package holiday provider.
The debt-laden company has struggled recently, as a fall in demand for package holidays and intense online competition resulted in a string of profit warnings.
Share value had fallen by around 80% over the past 12 months following a “disappointing” year which saw it post profit warnings in September and November 2018.
Thomas Cook has reportedly been approached about a takeover of its tour operating unit, and the entire company, by several parties.
The status of talks between the company and its potential suitors is unclear, with insiders cautious that any deal is likely to be months away.
Fosun, the Chinese company with which Thomas Cook runs a joint venture, is reported to have lodged a preliminary interest in buying its partner’s tour operating business.
The company has £1.4 billion of total debt and has hired consulting firm AlixPartners to help repair its balance sheet. FTI Consulting is advising a group of lenders on their financial exposure to Thomas Cook, according to the report.
Last month, Thomas Cook revealed plans to close 21 high street stores, resulting in 320 job losses.
The proposed closures are part of plans to “streamline” its UK retail network under an efficiency programme, amid changes in consumer behaviour.
In February, Thomas Cook also announced plans to conduct a strategic review of its airline business as it seeks funds to drive investment elsewhere in its business portfolio.
The holiday sector is in the middle of a brutal price war, with consumers making fewer big ticket purchases amid economic uncertainty.
Rival Tui has been forced to issue two profit warnings in recent month, while easyJet also warned of slower-than-expected sales.
