No speedy can-do for Arcandor

Do not expect a speedy resolution to uncertainty about Thomas Cook’s ownership after controlling shareholder Arcandor went into voluntary administration last week. This story will take time to unfold.

For one thing, German retail group Arcandor now has three months to present a plan for restructuring to a court-appointed administrator. It shows every sign of intending to emerge from insolvency and hang on to its 52.8% stake in Thomas Cook. In the meantime, the wages of its German retail staff are paid from public funds.

For another, anyone looking to buy Arcandor’s share of Thomas Cook – worth in excess of £1 billion – will have to find the money amid a continuing credit squeeze. The private-equity funds that would have been flouting their cash a year ago are not to be seen. That makes a management buy-out less likely.

The size of Arcandor’s stake also means a buyer would be compelled by UK takeover rules to bid for the rest of Thomas Cook, requiring total funds of perhaps £2.6 billion.

A bid from Germany’s third-largest travel group Rewe would trigger regulatory concerns and probably elongate the process. Rewe has expressed an interest and is a sizeable business, worth £45 billion in annual revenue. But it is not listed and finding the cash would tax it.

There are additional complicating factors. Arcandor has pledged part of Thomas Cook as collateral on a sizeable loan from a consortium of banks including Royal Bank of Scotland, for example.

What is the likely outcome? Senior figures in the trade like the idea of Manny Fontenla-Novoa leading a buy-out. UK analysts appear to favour Arcandor’s stake being made available on the stock market. The view from Germany suggests value in consolidation with Rewe. Nothing is likely to happen for some weeks while Arcandor draws up survival plans and German retail rivals size up slices of its empire.

None of this will help ease the minds of Thomas Cook employees. But the travel group is doing well. Fontenla-Novoa insists the business is “ring-fenced from Arcandor”, and the City and major investors like Thomas Cook and its management team. The real uncertainty will be on German high streets.