Thomas Cook to buy into Russia’s Intourist

By Anastasia Teterevleva and Paul Sandle

MOSCOW/LONDON (BestGrowthStock) – Thomas Cook is taking over travel group Intourist to tap into fast-growing Russian demand for Mediterranean beach trips and family holidays and plans future buys in China and Brazil.

Europe’s second-largest tour operator said Thursday it would take a 50.1 percent stake in Intourist, founded in 1929 and the monopoly provider of travel services in the Soviet era.

Thomas Cook will invest up to $45 million, made up of $10 million in cash and $35 million in Thomas Cook shares, in a Russia joint venture.

“The move into Russia is in line with our established strategy of capturing growth in emerging markets. I am glad we have taken our time to secure a strong partnership,” Chief Executive Manny Fontela-Novoa.

The move came as cash-strapped Britain sent its biggest ever business delegation to Russia — headed by Business Secretary Vince Cable — to boost trade and investment links.

Fontela-Novoa said he planned to target fellow BRIC nations China and Brazil, but warned not to expect an imminent deal.

“We’ve been evaluating the Chinese market for a long time. If you think Russia was slow, wait for China. Entry to China will be through an acquisition,” he told reporters in Moscow.

The Intourist deal came after months of negotiations between owner Sistema and Thomas Cook, whose shares are down nearly 18 percent this year as it battles tough conditions in home markets. The stock rose 1.4 percent by 1200 GMT.


Thomas Cook and its rival, TUI Travel, majority owned by Europe’s top travel agency TUI of Germany, are increasingly turning to emerging markets such as Russia and China for growth as cost savings from the creation of their companies in 2007 are close to being fully realized.

Also, the British and German tourist markets are considered relatively mature.

Following a significant restructuring in 2005, Intourist became Russia’s biggest mass-market travel brand, selling holidays to Russian tourists traveling domestically and also to international visitors.

Thomas Cook will have an option to buy the rest of the company, which will be led by Intourist’s president Alexander Arutyunov, over the next five years.

In March, two sources close to negotiations told Reuters that a full takeover of Intourist by Thomas Cook was being discussed as an option.

(Additional reporting by Vladimir Soldatkin; Writing by John Bowker; Editing by Jon Loades-Carter and David Cowell)

Thomas Cook to buy into Russia’s Intourist