The go-ahead has been given by the Competition Commission for a tie-up between high street travel operators Thomas Cook, the Co-operative and Midlands. When the deal is completed, it will create the biggest travel retailer in the UK. Thomas Cook is hoping that the merger will reverse its dwindling fortunes. In the last year, the firm has had to issue three profit warnings to share holders.
Manny Fontenla-Novoa, Thomas Cook’s chief executive, said the deal would increase the offering to customers on the high street, a market in which he still has confidence. However, travel industry analysts are remaining cautious about the outcome. Peel Hunt’s Nick Batram said the retail merger could become a distraction at a time when Thomas Cook needed to do more to solve its issues within the UK market.
Numis Securities has questioned whether more exposure on the high street will do anything more than increase profits over the short-term. The Competition Commission said that the merger was unlikely to have a negative impact on pricing because of strong demand for budget travel over the internet.
Laura Carstensen, leader of the enquiry and deputy chairman at the Commission, said the merger was unlikely to affect choice and pricing for the consumer. The watchdog will now ask for feedback on its findings and will publish a full report by the middle of next month.
Thomas Cook currently runs 780 shops, the Co-op has 360 outlets and Midlands owns 100. The travel market in the UK is currently struggling against a drop in consumer spending and the troubles which have been experienced in North Africa and the Middle East.
