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Title:Thomas Cook buys India, HK travel biz of Kuoni

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MUMBAI: Indian-Canadian billionaire Prem Watsa-backed Thomas Cook (India) will buy rival Kuoni's travel businesses in India and Hong Kong for Rs 535 crore, or about $85 million, upping its play in the fast-growing leisure industry.

The deal by Thomas Cook is the second biggest in India's travel services space after Watsa's Fairfax Financial purchased Thomas Cook itself for $150 million in May 2012.

Thomas Cook and Kuoni's tour operating businesses in India and Hong Kong will continue to operate as separate entities, the companies said in a statement.

The 134-year-old Thomas Cook will pay Rs 320 crore to add consumer-travel brands such as SITA, SOTC and Distant Frontiers to its portfolio in India, helping it overtake Peter Kerkar-owned Cox & Kings to become the top player in customized holiday bookings. It will pay the balance Rs 215 crore for Kuoni's Hong Kong travel business, marking Thomas Cook's foray into another Asian nation after Sri Lanka, where it acquired Luxe Asia a few days ago. The company also has a presence in Mauritius.

Thomas Cook - which pipped MakeMyTrip and Oberoi chain's Mercury Travels for the acquisition - will retain all of the 1,800 employees at Kuoni's India and Hong Kong units, which generated a turnover of Rs 1,804 crore and operating profit of Rs 29 crore in 2014.

The arrangement entails the Kuoni brand being licensed to Thomas Cook for one year in India and for five years in Hong Kong. The transaction, expected to complete in the course of this year, comes as the travel industry is projected to grow faster than the global economy, according to World Travel and Tourism Council.

Thomas Cook has become very aggressive on mergers and acquisitions since Watsa checked into the travel service provider three years ago. The BSE-listed company purchased Ikya Human Capital Solutions in 2013, and Sterling Holiday Resorts in 2014, transforming into a diversified enterprise. Shares of Thomas Cook, in which Fairfax holds close to 75%, closed at Rs 220 on Friday, giving it a market cap of Rs 5,600 crore.

"Our acquisition of Kuoni's tour operating and retailing businesses in India and Hong Kong as well as the Indian Inbound business reaffirms our belief in the India market potential, as also our strategic intent to explore viable geographies, including the larger Asia opportunity," said Watsa in a statement.

The deal marks the Switzerland-based Kuoni's exit from the tour operating business in India, which it entered in May 1996 through the purchase of SOTC, and the sale is part of its global strategy to focus on being a B2B travel service player. "The inclusion of the Indian destination management specialists in the deal provided Kuoni Group an opportunity to conclude a timely transaction at attractive terms," said Peter Meier, CEO, Kuoni Group. A travel industry expert said that the gem in the deal is the inbound travel business under SITA, which is a leader in India.

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