C&N Touristic AG chief executive Stefan Pichler said the company's £550 million purchase of Thomas Cook offered better value than German rival Preussag AG's takeover of Thomson Travel Group. Pichler was reminded that it was actually C&N which began the auction for Thomson earlier this year. C&N ultimately did not trump Preussag's winning bid for Thomson of 180 pence a share, or £1.8 billion. The C&N chief executive explained the group's reluctance to go beyond the 160 pence a share it tabled stemmed from the fact management was unwilling to overpay for Thomson. To have gone into a wholesale bidding contest with Preussag would have wiped out the synergies and savings from such a deal. Pichler said Thomas Cook had turned out to be much cheaper than Thomson, not just in bald monetary terms but also on a “price/value” basis. Thomas Cook cost C&N 12 times last year's earnings, significantly less than the 17.3 times net profits paid by Preussag for Thomson Travel, he said. Speaking at a London press conference to explain the rationale behind the Thomas Cook acquisition, Pichler said: “We had a maximum price (we would pay for Thomson) and it did not work out. “We went then to assess the UK market a second time and we came up with Thomas Cook and the price/value ratio was the best we could get out of the market.” Earlier, the C&N chief executive revealed that the synergies from the deal will total £15 million a year by 2005. He said he was unable to quantify the revenue benefits accruing from the takeover. The takeover ought to get EU clearance by the end of Jan, or early Feb 2001, he added. Asked about plans for further acquisitions, Pichler told journalists the task now is to integrate Thomas Cook into the C&N portfolio. “Dreams about acquisitions are too far away and we have our feet on the ground,” he said. The reason behind the Thomas Cook purchase - Pichler called his “London Christmas shopping trip” - was to gain critical mass in one of Europe's biggest holiday markets. The UK is second only to Germany. “If you want to run the show on a European scale, you have to be present in the biggest European markets,” he concluded. He said the idea is not necessarily to be the biggest integrated leisure group in Europe, rather to be the most efficient and effective - “to deliver the best return on capital employed”. The enlarged C&N will be second behind Preussag in terms of turnover once the deal is completed - leapfrogging Airtours PLC, the number one UK operator.


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