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Thomas Cook receives takeover approach from largest shareholder Fosun

The announcement follows months of speculation that Fosun was interested in buying parts or whole of the business
Shares in Thomas Cook surged 21% in early trading

Thomas Cook Group PLC (LON:TCG) is in talks with its largest shareholder about a possible offer to buy the British travel company’s core tour operator business.

Chinese group Fosun International Ltd, which owns an 18% stake in Thomas Cook, has made a preliminary approach for the tour operator business.

READ: Thomas Cook reassures customers and suppliers about financial health after profit warning

The announcement follows months of speculation that Fosun was interested in buying parts or whole of the business.

Earlier this year, Thomas Cook put its airline business up for sale and said it was considering the disposal of its foreign exchange arm.

'No certainty that formal offer will be made'

In a statement, Thomas Cooks said the can be no certainty that the approach from Fosun could result in a formal offer.

“However, the board will consider any potential offer alongside the other strategic options that it has, with the aim of maximising value for all its stakeholders," it added.

Thomas Cook’s market value has slumped 83% over the past year following a series of profit warnings. 

Last month the company was forced to reassure worried consumers and suppliers about its financial health. The tour operator told customers that the business was not in trouble and that all of its holidays were protected by UK protection scheme, Atol.

It held talks with a range of suppliers to reassure them that it had plenty of resources to cover the summer holiday season. Thomas Cook has blamed Brexit uncertainty, tough competition and last year’s summer heatwave for its recent underperformance.

But positive development

Ian Forrest, investment research analyst at The Share Centre, commented: “The news is not entirely a surprise as there were rumours of a potential bid last month from Fosun, which already has a significant stake in the company.“

He added: “Some analysts have questioned whether the company can survive so investors will be relieved about the possibility of a bid for all or some of the company.

“Naturally there is no certainty of a bid emerging at this point, and no assumptions should be made about the size of any bid and what shareholders may receive, but this is a positive development.”

In late afternoon trading, Thomas Cook shares were nearly 15% higher at 18.50p, albeit with the stock having shed almost 13% in the last month, and nearly 40% in value over the past three months. 

 -- Adds analyst comment, updates share price --

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