China’s Fosun considers US$940 million bailout of ailing Thomas Cook

Condor flying for Thomas Cook ©

Having announced back in June that China’s Fosun Travel Group, part of Fosun International Ltd. (Fosun), had expressed an interest in acquiring the U.K.’s Thomas Cook Group Plc. (Thomas Cook), the world’s oldest travel agency, it has now been confirmed that Fosun, a drugs-to-insurance conglomerate owned by billionaire entrepreneur Guo Guangchang may consider providing the debt-strapped business a £750 million (US$940 million) bailout.

While Thomas Cook’s bond rallied with the news, its share price fell. The deal will see shares diluted as the deal will involve swapping debt for equity and the issuing of new shares, while Thomas Cook will also cede control to the Chinese conglomerate and also relinquish a minor stake in its airline. The deal would have many similarities to Fosun’s 2015 acquisition of the resort chain Club Med and the Chinese Group is already an approximately 18% stakeholder in Thomas Cook, so some view this deal as Fosun looking to protect its previous investment.

Fosun and Thomas Cook are well known to each other as in 2016 they set up a travel agency partnership to specifically cater for China’s top 20% of wealthiest tourists. As of March 31, this year, the travel agent had debts totaling £1.9 billion (US$2.8 billion), a reduction in holiday bookings after last summer’s heatwave in northern Europe, plus uncertainty created by the U.K.s Brexit fiasco having negatively impacted the business.

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