First Choice Holidays of Britain said on Monday it was buying operator Ten Tour for 77 million pounds (123 million euros, 114.4 million dollars), aimed at expanding its package tour business in southern Europe.
Ten Tour is a leading tour operator to Turkey and Egypt and is best known in Britain for its Sunquest brochure. It also has operations in other Eastern Mediterranean and North African destinations including Tunisia and Morocco, where it flies a growing proportion of holidaymakers from France, Germany and Spain.
The acquisition will be financed through a mix of cash and shares and was expected to add more than one million customers this year to give First Choice capacity to handle more than five million passengers.
"This deal gives the group an exciting platform from which to build a strong pan-European base," First Choice Chief Executive Peter Long told AFX News, an AFP subsidiary, in a telephone interview.
The Ten Tour acquisition follows the recent deal with cruise ship operator Royal Caribbean, which injected 200 million pounds into First Choice in return for a potential 19.9 percent stake.
Long said that the Ten Tour deal has not been funded by the proceeds from the Royal Caribbean transaction.
"We've still got this money in the bank, but we're not going to let it burn a hole in our pockets. There will be other acquisitions very soon... it's a very active market out there," he added.
First Choice is to pay an initial amount of 40 million pounds for Ten Tour, half in cash and the rest in ordinary shares. Of the total maximum outlay of 77 million, around 50 million pounds will be in cash. The deal is expected to enhance earnings from the first full year of ownership.
The group expects to benefit from additional buying power from the increased volume of passengers.
First Choice plans to take on a proportion of Sunquest's flying capacity from Britain in the summer next year, using its own Air2000 airline.
"We can extract margin benefits here through the operation of destination-based aircraft," he said.
Profits at Ten Tour fell to 3.7 million pounds last year as earnings were adversely affected by earthquakes in Turkey and the turbulent political scene. However, Long said he expected a "significant recovery" this year -- LONDON (AFP)
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