Bit early to say that there will be flight crew layoffs - see the deal release:
KarstadtQuelle, the Germany based retail firm, has agreed to merge its subsidiary Thomas Cook AG, the European travel group, with MyTravel Group plc, Thomas Cook’s UK based counterpart.
STRUCTURE
The merger will be carried out via a scheme of arrangement. My Travel Directors intend unanimously to recommend that shareholders vote in favour of the Scheme.
TERMS
Following the Merger, KarstadtQuelle, which has agreed to acquire all of the shares in Thomas Cook which it does not already own, will hold 52% of the Enlarged Group, with existing MyTravel Shareholders holding 48%.
The implied offer price based on MyTravel’s GBp238 closing price on 09-Feb-07, last trading day prior to the deal announcement, and Thomas Cook's estimated equity value of approximately GBP1.06bn (EUR1.6bn), is GBp 224 per each My Travel share.
It values the entire issued share capital of MyTravel at GBP 1.04 bn (EUR1.55bn).
The implied offer represents a discount of approximately 5.8% to My Travel's GBp 238 closing price on 09-Feb-07, the last trading day prior to the firm announcement of the offer.
BREAK UP FEE
KarstadtQuelle has agreed to pay MyTravel a termination fee of GBP10 m if the Merger Agreement is terminated in the circumstances other than a material adverse change in the business, financial or trading position or prospects of the Thomas Cook Group.
POST DEAL DETAILS
MyTravel and KarstadtQuelle have established a new company, NewCo, which will effect the Merger by acquiring each of MyTravel and Thomas Cook (MyTravel by means of a scheme of arrangement). The Merger is to be effected pursuant to a Merger Agreement between MyTravel, KarstadtQuelle and NewCo. NewCo will be named Thomas Cook Group plc and listed and headquartered in London
It is expected that completion of the Merger will take place by Jun-07.
The proposed Board of the Enlarged Group will be drawn from the boards of MyTravel, Thomas Cook and KarstadtQuelle, supplemented by additional independent non-executive directors to be appointed by the Board as soon as practicable. The proposed Board will be chaired, as Non-Executive Chairman, by Thomas Middelhoff (currently CEO of KarstadtQuelle and Chairman of Thomas Cook), with Michael Beckett (currently chairman of MyTravel) being appointed as Non-Executive Deputy Chairman.
The boards of MyTravel and Thomas Cook believe that the annualised pre-tax cost benefits arising from a combination of the businesses will be at least GBP 75m per annum once the full benefits of the Merger are realised. It is expected that the full synergies will be realised within 24-30 months of Completion.
MyTravel and KarstadtQuelle anticipate that the Enlarged Group will be in a position to pay, post Completion, a dividend in respect of the year ending 31 October 2007.
CONDITIONS
The offer is conditional on:
My Travel EGM approval
Completion of the sale of Luthansa’s 50% stake in Thomas Cook by 30-Apr-07.
Court approval
EC approval