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UK tour groups in $1.4B deal
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April 29, 1999: 4:11 a.m. ET
Airtours launches hostile bid for First Choice, spoiling Kuoni merger plans
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LONDON (CNNfn) - U.K. travel giant Airtours launched a hostile bid for rival First Choice Thursday in a move to create the country's largest holiday firm.
Airtours' bid threatens to upset the merger deal signed last month between First Choice, the U.K.'s third-largest operator, and the specialist Swiss holiday firm Kuoni.
The move also threatens to spark a price war between the major holiday firms and draw in competition authorities already concerned about the power of the largest travel firms.
Airtours launched the 852.1 million pound ($1.37 billion) all-stock bid four weeks after First Choice rejected informal takeover talks and agreed terms with Kuoni.
The Swiss firm could now become a target for Thomson Travel. The U.K.'s largest tour operator threatened to start a price war with Airtours if the smaller company attempted to overtake Thomson's 27 percent U.K. market share.
Buying First Choice would boost Airtours' market share to around 33 percent. Its bid values First Choice (FCD) ordinary shares at 229 pence. The stock climbed 10 pence to close at 206.5 pence Wednesday while Airtours shares (AIR) climbed 4.5 pence to reach 458 pence.
The prospect of a bid battle reflects the rapid consolidation of the European tour operator market around three large groups led by Germany's Preussag (FPRS), Thomson (TRV) and Airtours.
All are active in the key northern European markets of the United Kingdom, Germany and Scandinavia which account for more than two-thirds of the EU's package holiday market. Airtours has also expanded in the United States through an Alliance with Carnival Corp (CCL).
Preussag's U.K. arm, Thomas Cook, merged last year with Carlson Travel, the largest independent U.S. tour operator.
The companies have followed a similar strategy of integrating their operations to include airlines, tour operators and main street travel shops to distribute their products.
-- from staff and wire reports
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