Thomas Cook (India) Ltd has announced a merger with a 27-year old vacation ownership company.
The merger with Sterling Holiday Resorts India Limited will focus on synergies and jointly leveraging growing domestic and inbound travel, vacation ownership and hospitality opportunities. The transaction is expected to close by the fourth quarter of 2014, subject to customary closing conditions and regulatory approvals as required.
The part equity, part merger deal is structured as a multi-stage process:
– TCIL will make a Preferential Allotment Investment for approximately INR187 crore into Sterling.
– TCIL will purchase shares from Sterling shareholders for INR176 crore.
– TCIL will make a mandatory open offer for INR230 crore.
– The merger between the two companies is at a defined swap ratio of 120:100.
With the merger, Thomas Cook India will gain access to Sterling Resorts network of 19 resorts in 16 holiday destinations in India. Sterling Holidays will also add 15 additional sites where it plans to add new resorts in the coming years, along with access to Sterling’s affiliation with Resort Condominiums International (RCI).
“The synergistic opportunities that this new partnership between Thomas Cook & Sterling Resorts offers are enormous, because they create multiple avenues to grow our respective businesses and to create valuable business opportunities together. TCIL’s merger with Sterling Holiday Resorts reaffirms our commitment to our stated strategy of investing in mutually beneficial partnerships that broaden our business services platform to increase shareholder value, said Madhavan Menon, managing director of Thomas Cook (India) Limited.
Citing similar opinion, Ramesh Ramanathan, managing director of Sterling Holiday Resorts (India) Limited said, “The merger with Thomas Cook will strengthen Sterling’s market position as there are multiple natural synergies which both companies will mutually benefit from. Thomas Cook customers will have access to our pan-India network of well located, full-service, quality resorts which offer great holiday experiences. Sterling stands to benefit from Thomas Cook’s iconic brand reputation and TCIL’s large base of domestic and inbound travel customers. There is also scope to add value to Sterling’s Vacation Ownership members through the synergies that exist between the two companies.”