The year to date has probably turned out as well as could be expected for the big two – leaving aside Thomas Cook’s court action against staff in Dublin protesting over redundancy. But at the corporate level, the recession has engendered some unexpected uncertainty.
The future ownership of Thomas Cook remains in doubt after German retail group Arcandor, which owns a controlling stake of near 53%, entered bankruptcy protection in June.
The banks to which that stake is pledged as collateral on loans are now considering how to dispose of it – in a single sale, in a shares issue or as a mix of the two – which means Arcandor is set for break up and control of Thomas Cook will pass elsewhere.
The recent rise in share prices may increase the likelihood of a stock-market sale. However, the shares rally could prove temporary. A single buyer might have to pay in excess of £815 million for Arcandor’s stake at last week’s prices and would require sufficient funding to make an offer for the whole business – making a management buy-out unlikely.
Potential purchasers will therefore view with interest the Thomas Cook trading statement on August 13. Privately owned German travel group Rewe, currently a rival to Thomas Cook, must remain favourite in the takeover stakes.
TUI Travel will also issue a trading statement next week. But interest may focus on controlling shareholder, German-based TUI AG, which performed a u-turn last week by investing in container shipping line Hapag-Lloyd months after trying to sell it.
TUI will provide €215 million of a €330-million cash injection in Hapag-Lloyd, in which it retains a 43% stake.
Hapag-Lloyd is all that remains of the German heavy industry and shipping giant from which TUI emerged. TUI had previously sought to sell the company to focus exclusively on tourism, but it was unable to find a buyer and instead made a partial sale to a consortium.
The deal involves TUI taking a stake in a Hamburg container terminal that it hopes Hapag-Lloyd will subsequently take over.
However, the global downturn in trade has left Hapag-Lloyd suggesting it needs €1.75 billion to secure its future, when TUI AG has already lent it €1 billion as part of the deal to secure its sale. Tellingly, the TUI AG board approved the latest funding as “a first package of measures”.