Kuoni Group sells all European tour operating businesses to REWE Group – New strategic direction proceeding more quickly than planned
“The successful sale of our European tour operating activities marks a significant milestone in the development of the Kuoni Group. European tour operating has been closely associated with the Kuoni name for more than 100 years. Our tour operating businesses and all their brands are now being taken over by the REWE Group and its experienced DER Touristik travel division, which will integrate them into its growth strategy. I am pleased that with this sale we have found an ideal, forward-looking, long-term solution for our customers and employees,” said Peter Meier, CEO of the Kuoni Group.
Heinz Karrer, Chairman of the Board of Directors of the Kuoni Group said: “With the sale of the entire European tour operating business we can complete the new strategic direction of the Kuoni Group more quickly than planned.”
Kuoni Group has signed an agreement with DER Touristik for it to acquire all the tour operators, specialists, travel agencies and online sales in the Switzerland, UK, Scandinavia/Finland and Benelux markets, as well as the airline Novair and the Playitas family and sports resort on Fuerteventura. The two parties have agreed not to disclose the purchase price or contract details. The acquisition is subject to the approval by the relevant competition authorities in the EU and Switzerland. The transaction is expected to be completed in the third quarter of 2015.
REWE Group is acquiring all of the approximately 2 350 (FTE) employees at the existing locations and will continue to run the business activities, including all the travel agencies, as part of its DER Touristik travel division. In 2014 the European tour operating activities that have been acquired generated turnover of around CHF 2.0 billion. With this acquisition DER Touristik is positioning itself as a leading pan-European travel company. DER Touristik sees the acquisition as an ideal addition to its sales operation, giving it new competitive advantages in the beach holiday business as well as in international purchasing of flight, hotel and other customer services. DER Tourstik is part of the REWE Group, one of the leading retail and travel groups in Germany and Europe.
The tour operating activities will continue to trade under their existing brands. REWE Group is acquiring the right to use the Kuoni brand in Switzerland and the UK, while Kuoni Group remains the owner of the Kuoni brand. REWE Group is taking full ownership of the Apollo brand in Scandinavia/Finland and of all the specialist brands.
Kuoni intends to complete its search for a buyer for the remaining tour operating activities in India and Hong Kong/China during the course of 2015.
The sale of the European tour operating activities is likely to impact the half-year results of discontinued operations in the range of CHF -180 million. This one-time effect includes the net result, the cost of the sales process and an impairment charge on goodwill. A large part of the overall charge has no effect on liquidity. Once the transaction is completed (Q3 2015) the accumulated currency translation losses (CTA) will also be recorded under “results of discontinued operations”. This is a one-off accounting effect related to the deconsolidation and does not impact the equity or cash position. Accumulated currency translation losses amounted to CHF 164 million as of the end of May 2015. The net debt position including advance payments by customers will improve once the transaction is completed. Cash and cash equivalents will reduce with the reduction in advance payments by customers from tour operating activities.
Kuoni Group announced in January 2015 that it would be concentrating on its core business as a service provider to the global travel industry and governments. This new strategic direction is turning Kuoni into a focused, clearly positioned global service provider with attractive growth prospects. It has no prepurchased flight capacities or hotel rooms, which significantly improves the risk profile of the Kuoni Group.
The company consists of three divisions: Global Travel Distribution (GTD), Global Travel Services (GTS) and VFS Global. These core business units have established leading positions in markets characterised by high growth rates. Its positioning as a unique service provider with a strong presence in Asia gives Kuoni the opportunity to increase its growth and profitability through economies of scale, and to build up business further by exploiting its cross-selling potential. Kuoni will focus in particular on markets with attractive, long-term growth potential in Asia, the Middle East and Africa. At the start of 2015 the company simultaneously launched strategic key initiatives to accelerate growth and boost profitability.
The Board of Directors of Kuoni Group intends to maintain to its existing dividend policy and suggests a distribution to shareholders amounting to 40-45% of profit from continued activities attributable to shareholders.