Kuoni Agrees to $1.4 Billion Takeover Bid From EQT Partners

Updated on
  • Swedish buyout co. wins bidding with 370 francs a share bid
  • EQT plans to expand Kuoni through further acquisitions

EQT Partners AB won the bidding for Swiss travel services company Kuoni Reisen Holding AG with a 1.39 billion-franc ($1.4 billion) offer and the Swedish buyout firm said it plans further acquisitions in the industry.

The Swedish buyout firm is offering 370 francs per B share, Kuoni said in a statement Tuesday. That’s 32 percent higher than the Zurich-based company’s closing price Dec. 30, the last trading day before Bloomberg News reported EQT was competing to buy Kuoni, citing people familiar with the situation. The shares jumped as much as 19 percent in Zurich trading, the biggest gain in 13 years.

Kuoni has been struggling to turn around its money-losing travel services unit, which arranges group tours and books hotels, amid heightened online competition. Last year, the century-old company announced job cuts, replaced its chief executive officer and proposed eliminating voting-rights limits, a move that analysts said would make it easier to buy.

“The price is on the upper end, I would almost say best-case scenario,” said Marco Strittmatter, an analyst at Zuercher Kantonalbank in Zurich who expected the price would be 315 francs to 375 francs per share. “It shows a capitulation of the board, that they don’t feel like they can survive as a listed company.”

EQT’s targets may include Hotelbeds Group, the online hotel-booking unit of TUI AG, Strittmatter added.

“Acquisitions are a concrete part of our growth strategy,” said Michael Bauer, a Zurich-based partner at EQT, speaking on a conference call. “We don’t want to comment on any concrete targets at this point.”

The Kuoni and Hugentobler Foundation, which controls 25 percent of Kuoni’s voting rights via the unlisted A shares, supports the bid. The foundation, which was set up by the founder’s son and business partner, will remain as a long-term shareholder, Kuoni said. Chief Executive Officer Zubin Karkaria and the current management team will remain in place.

Founder Alfred Kuoni began a travel agency in Zurich in 1906 and offered its first tour to Egypt the next year. In 1925, he joined with partner Harry Hugentobler and began expanding into France and Italy. Kuoni now employs about 8,000 people.

As the travel market has changed, Kuoni has also been tapping new sources of growth, such as a business that helps governments manage visa applications.

The stock lost about half its value in the decade through 2015. The Kuoni & Hugentobler Foundation is now ceding its hold over the company after having prevented Kuoni from falling into control of Swissair in the 1970s and German retailer Kaufhof in the 1990s.

The sale is the result of a competitive process that began several weeks ago, Kuoni said. The acceptance period is expected to run from March 8 to April 6, and Kuoni expects to delist its shares by the second or third quarter.

The Sunday Times said Jan. 31 that EQT plans to buy Hotelbeds for 800 million pounds and merge it with Kuoni.

Credit Suisse and Morgan Stanley provided financial advice to Kuoni, while Homburger served as legal adviser. JPMorgan advised EQT, while Baer & Karrer gave legal advice.

— With assistance by Richard Weiss

(Updates with analyst comment in fourth paragraph.)
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