Cox & Kings pays $25 mn for Tempo

Cox & Kings pays $25 mn for Tempo

Mumbai: Travel firm Cox and Kings India Ltd, or CKIL, spent about $25 million (Rs125 crore) to acquire Tempo Holidays, an Australia-based specialist leisure travel company. The deal was negotiated through Cox and Kings (Australia) Pty Ltd, an entity controlled by Mumbai-based CKIL.

The acquisition was funded by internal accruals and offshore debt from Axis Bank Ltd.

“Tempo Holidays is fit for us and seeing the performance of Tempo Holidays it reinforced our belief that the Australian market is ready for an upmarket brand such as Cox and Kings," CKIL’s Global CEO Peter Kerkar said in a statement. “Our products would be widely distributed in Australia and New Zealand."

Tempo, founded by Susan and Gary Hearst in 1990 as Yalla Holidays and rebranded in 2001, is a leading wholesaler in the Australian outbound tourism market and offers travel arrangements in 42 countries. The Australian outbound travel market is expected to average annual growth of 5.2% until 2016.

The purchase, which dovetails with a slowdown in the travel industry, is expected to give CKIL an opportunity to tap potential in the Australian and New Zealand market, said a Mumbai-based analyst at a domestic brokerage who didn’t want to be named because he isn’t authorized to speak to the media.

“Downturn time is the right time to buy assets, though entering capital market is not advisable," he said, adding that consolidation in the travel industry was imminent and that there would be more mergers and acquisition within the country and overseas.

In India, after airlines scrapped a 5% commission to travel agents on air tickets sold, Cox and Kings has started at least 20 more franchises in small cities and is expected to start 100 more.

“This acquisition and expansion assumes significance as one-third of travel agents will vanish from the scene. While small agents will shut shops, it gives lot of opportunity to big players who will emerge as specialist tour operators," the same analyst said.

Early this year, CKIL dropped a plan to raise about Rs500 crore through an initial public offering of shares as the stock market slumped.