While shareholders of Zurich-based Kuoni have not yet formally approved the nearly $1.4 billion merger offer for the company by the Swedish private equity firm EQT—it is regarded in the industry as a fait accompli—sources in the European travel trade are continuing to stoke the speculation that the new owners will acquire TUI’s bedbank-travel wholesaler, Hotelbeds.com, which has been shopped around by TUI for several months—TUI has been taking its time, using it to dole out releases about the unit’s healthy financial condition and outlook. In acquiring Kuoni, EQT is acquiring its bedbank component, GTA. GTA and Hotelbeds are two of the world’s largest.
According to a report in the Sunday Times, insiders said bankers had been waiting to see the outcome of the bidding war for Kuoni before starting their auction. EQT’s swoop on Kuoni has put it at the front of the queue to buy the TUI division, bankers said.
EQT, known in the UK for owning catering company SSP, agreed to terms with Kuoni after fighting off rivals Permira and Cinven. If the deal is signed, the 110-year old company will be delisted from the Zurich stock exchange.
According to FVW, Germany’s leading travel trade magazine, Hotelbeds is likely to be worth at least €1 billion ($1.3 billion). However, TUI will invite bids from other companies in the hope of driving up the price, the newspaper reported insiders as saying.
The publication has suggested that TUI is “tipping” EQT about the availability of its Hotelbeds unit, explaining: “A takeover of Hotelbeds by EQT would thus enable the merger of the world’s two largest B2B accommodation suppliers to create a new global giant to provide hotel and other accommodation to tour operators, travel agents, online portals and other customers.”
Should such a conflation take place, tour and travel industry observers might never know much about what it does publicly, because EQT will take the business private, with no listing on any exchange. Such an environment would, given the way it develops the properties it acquires, suit EQT well. The privacy would allow it to make long-term investments and operational plans in sync with its other holdings—which is not that easy to do when a company is overseen by shareholders interested in publicly announced quarterly dividends and the value of their investment portfolios.