Will Fosun rescue Thomas Cook?
China’s Fosun International is considering bidding for beleaguered British travel company Thomas Cook’s tour operating division.
Some "good news" has arrived at last for Thomas Cook's shareholders, says the Financial Times. China's Fosun International Ltd is considering bidding for the beleaguered British travel company's tour operating division. Fosun's bid comes shortly after Thomas Cook outlined plans to sell its airline in order to gain access to a new £300m financing facility. Whatever happens with Fosun, the airline sale is likely to go ahead since, under EU rules, the Chinese group wouldn't be allowed to own a majority stake in it anyway.
If you own shares in Thomas Cook, you shouldn't get carried away, since a sale to Fosun "is unlikely to leave investors much wealthier", says Lex in the FT. Even after this week's uptick, the stock is still 90% below last year's peak. While it is "a vintage brand plenty of Chinese tourists would appreciate", high indebtedness "weakens Thomas Cook's hand" in talks with Fosun, which has already spent £200m on an 18% stake .
Thomas Cook's shareholders should be grateful if they get anything, since the alternative is "complete wipeout", says Christopher Williams in The Daily Telegraph. Remember, "it won't be the shareholders calling the shots in this situation" as it's "the banks and hedge funds that hold the company's distressed bonds" who have the final say on the deal. They will judge it on Fosun's "plans for the future".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
If they are not convinced that Fosun's plans "come with cash to pay down debt", they could choose to take control of the company themselves. That would also mean that Fosun's £200m investment would be reduced to ashes.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
8 of the best houses for sale with libraries
This week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
By Natasha Langan Published
-
Investors pull money from UK equities as government warns of “painful” Budget
The government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
By Katie Williams Published
-
Why Thomas Cook collapsed
Features Thomas Cook has gone bust, leaving stakeholders, politicians and managers all blaming each other.
By Dr Matthew Partridge Published
-
What investors can learn from Thomas Cook's collapse
Features Bad decisions and bad debt have led to the collapse of 178-year-old travel company Thomas Cook. John Stepek looks at what investors can learn from its demise.
By John Stepek Published
-
Thomas Cook’s holiday nightmare
Features High debt, fierce competition and one-off factors have pushed tour operator Thomas Cook to the brink of bankruptcy.
By Ben Judge Published
-
Share tips of the week
Features MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
By moneyweek Published
-
Thomas Cook loses its 'moral compass'
News Tour operator Thomas Cook triggered outrage with its response to the deaths of two children on one of its holidays in 2006.
By Andrew Van Sickle Published
-
Tips update: Thomas Cook
Features Harriet Green's departure from Thomas Cook has rattled investors in the travel operator. But should it have, asks Phil Oakley.
By Phil Oakley Published
-
Shares in focus: Should you take a trip with Thomas Cook?
Features Package-holiday provider Thomas Cook has done a good job of turning itself around. So, is it time to get back on board? Phil Oakley investigates.
By Phil Oakley Published