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Thomson rejects $2.3B bid
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April 12, 2000: 6:03 a.m. ET
Holiday company rejects revised offer from Lufthansa joint venture
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LONDON (CNNfn) - Britain's largest travel business Thomson Travel on Wednesday rejected an increased $2.3 billion takeover offer from Germany's C&N Touristic, insisting that an increase of 11.5 percent from the original bid still undervalued the company.
Thomson said C&N indicated it would raise its offer to 145 pence per share from the original bid of 130 pence, which was worth a total of $2.06 billion. C&N, Germany's second-largest tour operator, is a  50:50 joint venture between German airline Deutsche Lufthansa and the country's biggest retailer Karstadt Quelle. Thomson said it would be willing to meet C&N's advisers for discussions.
"The board, which has been advised by Dresdner Kleinwort Benson, has concluded that an offer of 145 pence, if made, would not reflect the value of the business and its prospects." Thomson said.
Thomson shares rose 5.5 percent to 135 pence in mid-morning trade Wednesday. C&N's first offer on April 4 represented a 36.5 percent premium to Thomson's closing price the previous day.
Thomson has been seen as a takeover target as intense competition in the U.K. vacation business has slashed earnings and sent its shares tumbling since an initial public offering in 1998.
The company's shares started trading at 170 pence in May 1998, but fell to a low of 92 pence this year.
Shares in Lufthansa (FLHA), Europe's second-largest airline by sales, slipped less than 1 percent to  24.17, while Karstadt (FKAR) shares were little changed at 33.15.
Lufthansa and KarstadtQuelle have said they would provide C&N with a combined 750 million ($719 million) in loans and equity capital to support a takeover bid.
The combination of C&N and Thomson would create Europe's largest travel company. C&N has expanded aggressively in pursuit of German rival Preussag, currently the country's largest travel firm with 1999 sales of 7 billion.
Preussag, which is seen as a potential bidder for Thomson, announced Wednesday it expects to post record profit for the current fiscal year, while reporting that sales in the year's first five months rose by a third to 13.3 billion German marks ($6.5 billion).
Chief Executive Michael Frenzel said his company wanted to buy more travel firms and hotels, and also planned to invest heavily in its existing units. Preussag (FSE:FPRS) owns Thomas Cook, the third-largest U.K. travel agent and tour operator. 
--from staff and wire reports
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