Thomas Cook, Sterling Holidays extend gains post merger

MUMBAI: Shares of Thomas Cook India (TCIL) and Sterling Holiday Resorts gained momentum in trade after the duo announced a part-cash part-equity merger deal to create India's largest holiday company.

"The merger aims at building a holiday behemoth which will take holidays to a larger population," said Ramesh Ramanathan, MD, Sterling Holidays.

The merger process will start with TCIL making a preferential allotment to Sterling for Rs 187 crore. TCIL will, then, buy shares from other shareholders, including Bay Capital and ace investors Rakesh Jhunjhunwala, Radhakrishna Damani, for Rs 176 crore.

The company will, then, make a mandatory open offer for Rs 230 crore. Sterling will be merged into a wholly-owned arm of Thomas Cook.

“Thomas Cook will invest in Sterling's equity through a preferential allotment and buy out its promoters, besides making an open offer. The swap ratio for shares is fixed at 120 shares of Thomas Cook for 100 shares of Sterling Holiday. The overall deal values Sterling Holiday at Rs 8.7 billion,” said Maybank KimEng report.

Shares of both TCIL and Sterling Holidays have been in an uptrend after The ET broke the story of merger on February 4. TCIL has surged 17.42 per cent from February 3 close of Rs 78.35 to today’s intraday high of Rs 92. Sterling Holiday has rallied 8.13 per cent in the same period.

At 09:50 a.m.; Sterling Holday Resorts was at Rs 93.60, up 0.75 per cent, on the BSE. It touched a high of Rs 99 and a low of Rs 92.80 in trade today.

TCIL was at Rs 88.35, up 0.97 per cent, on the BSE. It touched a high of Rs 92 and a low of Rs 86.65 in trade today.