Swedish private equity firm EQT aims to create a new European tourism group with the agreed takeover of Kuoni and possible purchase of TUI's Hotelbeds unit.
EQT will offer CHF 370 per share for the Swiss group in a deal supported by Kuoni’s board. The offer values the Swiss group at CHF 1.4 billion (€1.2 billion) and represents a 34% premium on its average share price over the last 60 days. Kuoni’s main shareholder, the ‘Kuoni and Hugentobler Foundation’, with 6.25% of equity capital and 25% of voting rights, supports the offer and plans to remain a shareholder.
Overall, the offer needs to be accepted by 67% of Kuoni shareholders to go ahead. If sufficient shareholders agree to the EQT offer, then Kuoni would be delisted. Completion of the offer, which follows a competitive bidding process with several interested parties in recent weeks, is expected in the second or third quarter of this year. Kuoni Group CEO Zubin Karkaria and the current management team will continue to lead the company into the future.
Following the sale of its tour operator activities in Europe and overseas, Kuoni now has three core business activities. The largest is B2B accommodation provider GTA, the number two worldwide, while the other two are destination/incoming services and visa services.
Experts believe that EQT is also interested in acquiring TUI’s B2B accommodation unit Hotelbeds, the global number one. TUI announced last autumn that Hotelbeds, with profits of €117 million and turnover of €4.3 billion, is no longer a core business and has commissioned two investment banks to seek buyers.
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.
Explaining the sale decision, Kuoni said the EQT deal would enable the group “to further develop its position as a leading, focused and global travel services provider by investing in technology, in its enhanced service portfolio and in the acquisition of other businesses”. Suppliers, customers and governments will continue to benefit from Kuoni’s innovative strength, its attractive service portfolio, investments in technology and the acknowledged quality of its global offerings. Existing business relationships will continue as before, it emphasised.
Chairman Heinz Karrer commented: “Over the last months the Board has very carefully analysed all strategic options in order to secure the successful implementation of Kuoni Group’s strategy. As a result of this detailed and comprehensive analysis and a competitive process, the Board concluded unanimously that taking Kuoni private and handing over the responsibility for the group to an internationally renowned new owner with comprehensive experience in managing and further developing industry leaders, with the necessary financial strengths and with a long term perspective would be the ideal solution to the benefit of all stakeholders. EQT fulfils all these requirements in the best possible way.”
Zubin Karkaria, CEO of Kuoni Group, added: “We welcome EQT’s investment in the Kuoni Group, which underlines the attractiveness of our business activities. With the new owners we will be able to accelerate the implementation of our strategy. Investments in technology and supporting acquisition opportunities give the Kuoni Group an excellent platform to build further on its leadership positions in travel industry services. EQT has an impressive track record of growing companies. With access to their experience and network in both the travel and tech industries, we will be able to accelerate the implementation of Kuoni’s strategy.”
Kuoni stressed that the operational measures announced in November 2015 are unchanged and the implementation progresses according to the previously announced plan. The GTS Division is being restructured in 2016; group and support functions are being adjusted. The GTD Division is focusing on improving margins and introducing new tools and services to give customers easy access to travel services. VFS Global will continue to innovate and to invest in technology and services to further enhance its successful visa business and additional services.
Michael Bauer, Partner at EQT Partners in Zurich, said: “EQT is proud of taking over the responsibility for the further successful development of one of the world’s leading travel services providers. We follow an industrial, long-term oriented approach when investing into companies to build sustainable market leaders. It is our ambition to enable the Kuoni Group to strengthen the market position of its businesses, both through organic growth and acquisitions, and to further increase the attractiveness of the Kuoni Group for clients, business partners and employees. This marks the starting point of a very promising era for Kuoni to continue to build successfully on its 110 years long journey.”
EQT is one of Europe’s leading private equity houses founded by Investor AB, Scandinavia’s largest industrial holding group and part of the Wallenberg Group.
