Sold! Thomas Cook North America Bought By Red Label
Despite gross assets of $263 million in 2012, Thomas Cook North America sells for $5.3 million
03-20-2013 By: Zachary-Cy Vanasse
The deal will see Red Label Vacations, which operates as Redtag.ca, take over all assets of Thomas Cook North America, which is made up of Thomas Cook Canada Inc. and Thomas Cook USA Holdings Inc. The purchase includes all operating brands in the wholesale and retail sectors, as well as ABC Corporate Services Inc. and DFW Travel Arrangements in the United States.
Dean Moore, CEO, Thomas Cook North America, will continue to lead the business under its new ownership.
The $5.3 million dollar price tag has come as a surprise to many in the industry, as the company had gross assets of £169.3 million ($263 million) for the fiscal year ending Sept. 30, 2012.
However, TCNA had incurred substantial losses, reporting a loss of £86.7 million ($135 million) for the 2012 fiscal year. Harriet Green, CEO, Thomas Cook Group, has been implementing sweeping changes throughout the company in the interest of reducing the group's debt since she was appointed CEO last summer. Thomas Cook Group has said the proceeds of the sale will be used to reduce its debt. The sale of TCNA will also serve to stop additional losses incurred by the North American operation.
Debt concerns aside, the sale price for the entirety of TCNA would still appear to be remarkably low considering the high price the North American group has paid for many of the companies now under the TCNA umbrella.
In June 2008, Thomas Cook's Canadian subsidiary acquired Intair/Fun Sun for $100 million. The group then paid tens of millions more over the years for companies such as Encore Cruises, Holiday Network/Holiday House, Sunquest, Alba Tours and so on.
Ironically, Red Tag owners Enzo, Joe and Frank DeMarinis also happen to be the founders of Bel Air Travel, which they sold to the North American Leisure Group in 2001. The North American Leisure Group would later become MyTravel and then Thomas Cook. Bel Air Travel remains one of the brands the DeMarinis brothers acquired in purchasing TCNA.
New ownership's future plans for TCNA are unknown. The transaction is still subject to a number of conditions, including clearance by the Competition Bureau of Canada, and will likely be completed by May 31. At that time, a more clear picture of the new ownership's plans for the company may start to emerge.
Restructuring at the Thomas Cook Group
In recent months, the London-based Thomas Cook Group has made significant cuts to its operating costs. In early March, the group cut 2,500 jobs in the U.K. and announced the closure of 195 of it 1,069 stores in Britain. German, British and Belgian airlines were grouped under a single brand. And the restructuring in Europe continues.
Approximately 23 million people travelled with the Thomas Cook Group in 2012, resulting in revenues of £9.5 billion ($14.8 billion). The company remains present in 19 countries, down from the 21 it had with Canada and the U.S.
- with files from André Désiront