Mumbai/Bangalore: British specialist travel company Holidaybreak is in discussions with Mumbai-based tour operator Cox & Kings Ltd regarding a possible offer, which if finalised could end the Indian firm’s year-long search for a global buy.
Holidaybreak said the discussions may or may not lead to a cash offer of 432.1 pence per ordinary share, which is at a premium of 18% to the stock’s Monday close.
The news sent Holidaybreak shares up more than 12% to 412 pence, making it the biggest gainer on the London Stock Exchange on Tuesday. The stock touched a high of 417 pence, its biggest gain in more than three years.
Meanwhile, shares of Cox & Kings closed down 0.9% at Rs 197.85 in a Mumbai market that was battered by a interest rate increase by the central bank.
Holidaybreak, which provides residential outdoor education and adventure trips for school children, is valued at £225.24 million based on its Monday’s close.
“We view the offer price of 432.1p as broadly adequate...the main prize for any bidder is the education division,” said analyst Sahill Shan at Brewin Dolphin.
Holidaybreak had on Monday revealed it was in takeover talks with third parties.
Cox & Kings said on Tuesday it was in acquisition talks with Holidaybreak but had not finalised an offer.
“In line with the company’s growth strategy, it is in talks with Holidaybreak plc...which may or may not lead to an offer for shares in Holidaybreak,” Cox & Kings said in a statement.
“It is difficult to assess the financial implications but it is a positive news because this has been pending for a long time,” said Daljeet Kohli, head of research at IndiaNivesh Securities.
“This, in our view, fulfils Cox & Kings’ requisites as they were looking for a company which was into specialised tourism and (is) a market leader in that industry,” said Kohli. The company, parent of the UK-based unlisted Cox and Kings, had allocated liquid funds of over Rs 1000 crore in January for acquisitions in the US and Europe.
Last week, Cox & Kings received federal approval to raise Rs 750 crore through a qualified institutional placement of securities to foreign institutional investors.
“We believe impending acquisition was a big overhang on the stock price since the past few months. With some clarity emerging on this front, from here on the stock will be valued on merits of business and the acquired target’s performance,” Kohli said.
Cox & Kings shares have shed about a quarter of their value since the beginning of 2011.
It gets over half its overall revenues from international operations and is looking at more overseas buys to drive future earnings and growth.
The company in December 2009 had acquired Australia-based MyPlanet Australia Pty Ltd & Bentours International Pty Ltd from a unit of TUI Travel Plc , and has been scouting for buys since the middle of 2010.