Deal Street

January 23, 2016

Kuoni Groups' travel dealings to be amalgamated


azb-&-partners

In 2015, Thomas Cook (India) Ltd, a tour operator, acquired the 100% stake in Kuoni Travel (India) Pvt. Ltd, worth INR 535 crore. According to the Thomas Cook, the transaction was ended in the 3Q of the financial year. The transaction completed on 16th December, 2015.

Presently, Thomas Cook Ltd is merging the travel business of Kuoni Group in India while Kuoni Ltd will be renamed as SOTC Travels (India) Ltd though the brand Kuoni will cease to exist by December.As part of the merger, Kuoni’s inbound travel businesses SITA Travels and destination management business Domestic Frontiers will be de-merged from Kuoni India and amalgamated into Thomas Cook’s unit Travel Ltd. Yet, Thomas Cook would retain to compete with SOTC in the market.

Madhavan Menon, chairman and managing director of Thomas Cook, stated that, company has decided not to integrate the SOTC with itself even though the licence of using the brand Thomas Cook will expire by 2025.

“We are choosing a safer bet by not integrating two brands. However, we will be sharing non-customer facing services such as human resources, IT, legal, administration, media buying and airline buying with Kuoni to derive synergies,” said Madhavan Menon.

He added that Thomas Cook and Kuoni will compete in product development, pricing, sales and other aspects as two separate entities. Thomas Cook Ltd, declared the naming of Vishal Suri as managing director of Kuoni Travel Pvt Ltd, effective January 4, in replacement of Rajeev Wagle.

As per Vishal Suri, the company is in the process of de-risking the business and transitioning into a new SOTC brand. The brand Kuoni will be terminated from December, said Vishal Suri, “An independent board would be running SOTC and it will continue to run its business independently. The pricing and products would be different from Thomas Cook.” By 2025, the utilization of the Thomas Cook brand will be expired.

“Nine years is a long time to decide on branding. The Kuoni acquisition has allowed us to use the brand SOTC in perpetuity. However, nothing has been decided as of now.” Menon stated that, the outlook for the travel industry for both domestic and international is positive, although slowing economies, globally. “However, it is not a wise decision not to integrate SOTC with Thomas Cook for the simple reason that a customer will get similar travel products from both Thomas Cook and SOTC. It will lead to cannibalization.”

AZB & Partners advised Kuoni Travel Holding Limited on this transaction and its concerned Partner & Associates were Darshika Kothari (Partner) and Vijay Sureka (Senior Associate).



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