A sharp intake of breath ran through the European travel industry at the sky-high agreed bid of £1.8bn by Preussag AG of Germany for the UK’s Thomson Travel Group. Preussag’s price, which equates to 180p per share, allows for the sale of its existing 51% stake in the Thomas Cook Group, Thomson’s UK-based rival. The planned disposal pre-empts almost certain intervention by UK and EU competition authorities.

Many industry watchers question the financial judgement underlying the bid and the Frankfurt bourse saw Preussag's stock sag 5.8% following news of the deal’s acceptance. But Preussag chairman Michael Frenzel is unrepentant: "It not only secures our position as the biggest player in Europe, but [also] creates a huge possibility of building-up two major brands into one huge quality operator."

The scale of the combined company – nearly twenty million package holiday sales annually – is over double that of former European market leader Airtours. "It's going to be big, all right," conceded one anonymous analyst, “but quite honestly, it is just far too expensive."

News source: Wall Street Journal