The Board of First Choice Holidays PLC has announced that talks regarding the possible sale of its mainstream business have been terminated. (2/13/2007)
First Choice will announce its usual trading update at the Annual General Meeting to be held on 7th March 2007.
The development comes at a stage when the boards of MyTravel and KarstadtQuelle agreed the terms of a recommended merger of MyTravel and Thomas Cook.
In November last year, the company regarding its Mainstream business had stated: “The Board of First Choice Holidays PLC confirms that it has been reviewing how it might continue to maximise the potential of this market leading tour operating business. It is considering a range of alternatives in this market and discussions with a number of parties are at a preliminary stage. However, there can be no certainty that any transaction will be forthcoming.”
According to local media, shares in holiday firm “First Choice plunged almost 13 percent as rivals Thomas Cook and MyTravel abandoned plans to bid for its package holiday business after unveiling a merger.” First Choice shares dropped 13.4 percent to 264.25p after hitting a low of 245.25p.
MyTravel chief executive, Peter McHugh, according to Guardian Unlimited, made it clear that a deal with First Choice is not now on the agenda. “The new merged company will certainly not pursue First Choice,” he reportedly said. “The merger of MyTravel and Thomas Cook is quite a feat in itself.”
In the same report, Nigel Parson at Evolution Securities said news had thrown the business into disarray.
“First Choice will now face increased competition from the combined entity, and plans by First Choice to recycle the proceeds quickly into further acquisitions in adventure and activity and US student holidays will return to the `slow track’,” he said.
As per the information available, the mainstream business, which contributed Ł53.5m, or about 40 percent, of group profits in 2006, is said by some analysts to be worth up to Ł800m despite the decline in the package holidays in favour of more exotic, niche locations. Other analysts estimate a value of Ł500m to Ł600m, according to local media.