Thomas Cook up for sale as Arcandor collapses

10th Jun 2009

Thomas Cook could be sold to institutional investors after its parent company Arcandor went into administration today.

The German retail giant, which owns a 52.8 percent stake in Thomas Cook, filed for bankruptcy after failing to secure state aid. German Chancellor Angela Merkel rejected its desperate plea for a €650m bail-out, accusing its shareholders and backers of not presenting a sustainable plan that would protect taxpayers’ money.Whilst Thomas Cook’s listing on the London Stock Exchange has left it “ring-fenced” from the collapse of German-listed Arcandor, doubt remains over who its future ownership.

Analysts suggest that the most likely scenario is an orderly placing of the shares with institutional investors. However with a 52 percent stake up for grabs, a takeover remains a possibility, with Rewe, Germany’s third-biggest tour operator, tipped to make a bid. Rewe said early that it would consider buying the stake if it was put up for sale.

Karl-Gerhard Eick, the Arcandor chief executive, admitted that he had considered selling the stake to Rewe in order to slash the group’s debt mountain.

In an interview last month he said: “Under normal circumstances proceeds of €1.3 billion to €1.4 billion would have been possible. But right now, such a price is impossible to get. If I sell now, I wouldn’t even be able to pay back the loans.”


Another possibility is Manny Fontenla-Novoa, the Thomas Cook chief executive, seeking backing for a management buyout.

Thomas Cook could not be reached for comment but it earlier said: “Arcandor is not our parent company and we are not associated with its financial business at all. thomas cook is an independent company listed on the London Stock Exchange and we are completely ring-fenced with totally different credit lines.”

Arcandor struggled back from the brink of bankruptcy in late 2004, but its problems were compounded by the global recession. It applied for state aid in May.

The European Commission last week warned warned Berlin it considered Arcandor to be a victim of past management mistakes, not of the recent credit crunch, and that Brussels would deem any government guarantees illegal state aid.


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