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European travel deal urged
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June 18, 1999: 12:20 p.m. ET
U.K. travel group recommends merger versus possible hostile bid
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LONDON (CNNfn) - British holiday firm First Choice urged its shareholders to vote for a friendly merger with Swiss group Kuoni Friday, although a hostile offer from British rival Airtours could still lie ahead.
First Choice and Kuoni agreed to merge in March, but that deal was upset when Airtours launched a hostile $1.4 billion takeover offer for the U.K. group.
The Airtours offer was held in abeyance, however, while European competition watchdogs investigate possible anti-trust implications. Airtours has canceled its offer, awaiting the ruling from Brussels, which will take four months.
First Choice stock rose 2 percent to 193 pence Friday in London, although the shares are still far from the peak of 259 pence reached when Airtours made its takeover offer. Shareholders representing 51 percent of First Choice's capital had already accepted Airtours' offer before the European Commission put a temporary block on the deal.
Shareholders have to decide whether to accept a merger offer from Kuoni, which expires on July 8, long before the antitrust officials report back in October.
In a statement First Choice Chairman Ian Clubb said the Kuoni bid "represents the best opportunity for delivering long-term value to shareholders. Shareholders are strongly advised to accept."
The EU's investigation will decide whether an Airtours/First Choice combination -- the second and fourth-largest holiday firms in the United Kingdom - would have "adverse effects on prices and/or other key competition matters."
Airtours stock inched ahead to 503 pence in London Friday, and Kuoni shares rose gently in Zurich.
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