Thomas Cook shares climb 17% on takeover talk

Shares and bonds in Thomas Cook have rallied since a media report said the British travel company was approached by several parties about a possible takeover of its tour-operating unit or the entire business.

The report of takeover interest from private equity firms quelled worries about the world’s oldest tour operator’s £1.7bn (€1.9bn) of debt, which has wiped two-thirds off its market value over the past six months.

Citing unnamed sources, Sky News reported over the weekend that US private equity firm KKR and Swedish buyout group EQT Partners were potential bidders for the group.

China’s Fosun International, which owns a 17% stake in the company, was understood to be among those to have lodged preliminary interest in the tour business, it added.

Thomas Cook has brought in advisers from AlixPartners to work on its balance sheet and cost-reduction plans, while its syndicate of more than a dozen lenders has hired FTI Consulting to advise on their financial exposure to the company, the report added.

A spokesman for the company declined to comment on the report.

The company’s shares, listed on London’s small-cap index, climbed 17%, and the price of the company’s 2022, euro-denominated bonds rose more than 6%, according to Tradeweb.

Both were set for their best daily performance since early December.

The firm’s equity is valued by the stock market at £376m.

The cost of insuring debt issued by the company against default eased to 24 basis points, to its lowest in weeks, from 28 previously, IHS Markit data showed.

The report comes after Thomas Cook put its airline business up for sale and closed stores in February, after a heatwave in northern Europe last summer deterred holidaymakers from booking last-minute deals, leading to two profit warnings and speculation among investors that it might need to raise funds.

Thomas Cook last month announced a review of its money division in its latest step to streamline operations and focus on its core holiday business.

- Reuters

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