Thomas Cook said it will take full ownership of the 764-strong network of travel branches, buying the Co-op Group’s 30 per cent stake and Central England Co-operative’s 3.5 per cent holding for £55.8 million. All stores will be rebranded as Thomas Cook over the next two years.
The deal brings to an end the partnership launched in October 2011 when Thomas Cook, the Co-operative Group and the then Midlands Co-operative, now Central England Co-operative, merged to create the UK’s largest travel agent.
It follows a decision by the Co-op to take up its right to sell its stake, which was part of the original deal.
Peter Fankhauser, chief executive of Thomas Cook, said: “This purchase gives us full control over our retail store network, enabling us to better integrate our stores with our online offering, while also helping us to focus on growing sales of added extras such as holiday-related financial services. Over the next two years, we will bring all of our UK stores under the Thomas Cook banner so we can make full use of the best brand in travel.”
Thomas Cook will have the right to carry on using the Co-operative Travel brand until November 2018. Rod Bulmer, chief executive of consumer services at the Co-op, commented that “having a minority stake in a travel business does not fit with the strategy of the Co-op”.
He said that the Co-op planned to invest the proceeds from the deal back into the mutual’s wider business, which also includes food stores and funerals.
The joint venture with the Co-op initially had more than 1,200 shops, but has shrunk as Thomas Cook axed costs from the merged network and amid competition from online holiday rivals. Co-operative Travel originally started life as a day excursion organiser in 1905.
Thomas Cook recently posted a 40 per cent fall in underlying profits to £308m in what the holidays giant said had been a “difficult year for tourism”. This included terrorist attacks in Europe and political instability in holiday hotspot Turkey.
John Colley, a professor at Warwick business school who is an expert on mergers, said: “The weak pound and threat of terrorism, together with Co-op’s wish to narrow its scope, presents the perfect opportunity for a cheap price.”