Thomas Cook Regulatory News (TCG)

18 Dec 2008 11:36



18 December 2008

THOMAS COOK GROUP STRENGTHENS ITS POSITION IN THE INDEPENDENT TRAVEL SECTOR 

Thomas Cook Group plc ('Thomas Cook' or the 'Group') announces today the acquisition of Gold Medal International, a leading UK independent travel company.

Highlights:

Acquisition of Gold Medal fully supports Thomas Cook's strategy of expanding its presence in the independent travel sector

Initial acquisition of 50.01% for £24.9 million (including £21.1 million of net cash); acquisition of the balance through option mechanism with payment tied to financial performance 

Strong financial performance of Gold Medal, expected to deliver more than £9.0 million of EBITDA in its year ending 31 March 2009

In line with its strategy to become a leading independent travel provider, Thomas Cook announces today that it has agreed to acquire a majority interest in Gold Medal International Limited ('Gold Medal'), one of the UK's leading independent travel companies, from its founder and sole shareholder, Ken Townsley. The acquisition is conditional upon competition clearance and is expected to complete in the first quarter of 2009.

Founded in 1984, Gold Medal is a leading long-haul tour operator and supplier of scheduled flights and accommodation to 1,500 worldwide destinations, with a strong focus on the US (particularly New York and Florida), the Far East and Australasia, and with a market leading position in Dubai. Gold Medal has developed strong relationships with airlines, hotels and car hire suppliers. Its brands include Gold Medal, which sells through independent travel agencies, Netflights.com, which sells directly to consumers, and Pure Luxury, a luxury tour operator. Gold Medal is the UK's largest privately owned ATOL licence holder, with over 550,000 passengers licensed. The company employs approximately 500 staff members at its Preston headquarters.

The transaction is structured so that, on completion, Thomas Cook will hold a 50.01% economic interest in Gold Medal. The initial consideration will be satisfied by a cash payment of £24.9 million (which includes the acquisition of £21.1 million in net cash as per 30 September 2008), payable from internal resources, and in addition Thomas Cook will contribute its Flight Savers business to Gold Medal. 

Thomas Cook and Ken Townsley will enter into call and put option arrangements pursuant to which Thomas Cook will be able to acquire from Ken Townsley his remaining holding in the enlarged Gold Medal from 31 March 2010, the consideration for which will be based on the profitability of the combined Gold Medal and Flight Savers businesses, using a multiple of 4.4x EBITDA (declining over time). The total consideration payable (including the initial consideration) is capped at a maximum of £87 million.

For the year ended 31 March 2008, Gold Medal achieved EBITDA of £6.4 million and profit before tax of £5.3 million on gross sales of £300.2 million, and had gross assets of £92.7 million at year end. For the year ending 31 March 2009, it expects to achieve EBITDA in excess of £9.0 million.

Flight Savers, the business that Thomas Cook is contributing to Gold Medal, provides scheduled flights to the Thomas Cook sales distribution network in the UK & Ireland. It had gross sales of £90.4 million in the year ended 30 September 2008. 

It is intended that the combined Gold Medal and Flight Savers business will operate as a standalone entity and it is expected that annual synergies in excess of £4 million will be generated out of the transaction as a result of cost efficiencies and better distribution. The experienced management team of Gold Medal will lead the combined business and will report directly to Ian Derbyshire, CEO of Independent Travel for UK & Ireland. The management team will be incentivised towards the achievement of the combined business plan and synergies. 

Manny Fontenla-Novoa, Group Chief Executive, Thomas Cook Group plc said:

"The acquisition of Gold Medal is a very good opportunity to strengthen significantly our position in the important independent travel sector. Through Gold Medal we have access to excellent product, great technology and highly experienced travel experts, and I believe that we have secured a financially attractive transaction with appropriate incentives for existing management to deliver further value in the business. I have great confidence that this acquisition represents excellent value for the Group and will drive further synergies and customer benefits."

For further information please contact:

Brunswick Group LLP Tel: +44 (0)20 7404 5959

Fiona Mulcahy

Zoe Bird

Thomas Cook Group plc

Jill Sherratt, Investor Relations Director Tel: +44 (0)20 7034 7585

Notes to Editors:

About Thomas Cook Group plc 

Thomas Cook Group plc is one of the world's leading leisure travel groups with sales of around £9 billion (€12 billion), 21.2 million customers, 28,000 employees, a fleet of 93 aircraft and a network of over 3,150 owned and franchised travel stores, hotels and resort properties. It operates under five segments: UK & Ireland; Continental Europe (Germany, Austria, Belgium, France, the Netherlands, Poland, Hungary, Slovenia and Slovakia); Northern Europe (Sweden, Norway, Denmark, Finland), North America (Canada and USA); and German airlines operating under the Condor brand. The Group operates in 21 countries including India and Egypt.

Gold Medal Management Team

Terry Fisher (CEO) joined Gold Medal in 2006 bringing over twenty years of travel sector experience including Managing Director positions at Travelworld, Going Places and UKLG Retail. Steve Bacon (CFO) also joined Gold Medal in 2006. Before Steve was Finance Director of Home Delivery Network (HDN), part of the Littlewoods Shop Direct Group for five years. Under Terry's and Steve's leadership, Gold Medal improved EBITDA from a loss of £1.0 million in the year ended 31 March 2006 to a profit of £6.4 million in the year ended 31 March 2008.