Thomas Cook acquires Russian travel stake
Russian package holiday market expects to see double digit growth
By CFOWorld.co.uk | CFO UK | Published 10:18, 25 November 10
Thomas Cook announced on Thursday that it will acquire a 50.1 percent stake in Intourist, Russian’s oldest and best known travel agency.
The operation will cover different aspects of the Russian market including inbound, domestic and outbound travel, where there is already strong demand for package holidays, particularly to Turkey and Egypt, due to strong economic growth and increasing wealth in the country.
The investment is in line with the company’s strategic objective of expanding in to emerging markets and that the Russian package holiday market is expected to see double digit growth in the near future, the company said.
Intourist carried over 650,000 passengers in 2009 and has a network of 144 shops throughout Russia. Thomas Cook said that volumes for the first nine months of the year were already up 30 percent over the same period in the previous year.
The investment will be made up of $10 million (£6.34 million) cash payment and $35 million (£22.2 million) of Thomas Cook shares. The company will have the option to buy the remainder of the shares over the next five years.
The Intourist existing management team, under president Alexander Arutyunov, will continue to run the operations, together with new appointments from Thomas Cook. Denis Wathier, CEO of Thomas Cook France, will be appointed chairman.
Group chief executive of Thomas Cook group, Manny Fontenla-Novoa, said: “Together with Intourist’s strong management, we see huge potential to establish a leading position in the market and to grow sales and profits by leveraging Intourist’s local market knowledge, Thomas Cook’s scale and strength in key destinations and our combined tour operating expertise.”
The joint venture, which is still subject to anti-trust clearance and other conditions, should be complete by February 2011.
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