Thomas Cook’s future uncertain after bankruptcy

Thomas Cook’s biggest shareholder, Arcandor, filed for bankruptcy yesterday, sending shares in the travel agent down four per cent. However a rally in the shareprice was prompted by the news later that Rewe Group, one of the biggest private companies in Germany, was looking at buying it and by the close its shares had rebounded 10 per cent.

The 128 year-old Arcandor has interests in a multitude of German businesses, including Karsdtadt, the department store chain and mail order company Primondo, as well as owning 53 per cent of Thomas Cook. However, after failing to persuade the German government to offer it state aid it was forced into bankruptcy, with most of its shareholding collateral against its borrowing from banks including Royal Bank of Scotland.

Rewe chief executive Alain Caparros described Thomas Cook as an "interesting brand", and went on to say, "we have the strength to undertake future acquisitions when attractive opportunities present themselves." However Thomas Cook chief executive Manny Fontenla-Novoa stressed that it had received no formal offer and that its business was immune from the effects of the Arcandor bankruptcy. It said it was owed nearly £1m by the company but beyond that it had no shared cash or guarantee arrangements.

Most analysts expect Arcandor, which employs 70,000 staff, to be broken up rather than restructured while in bankruptcy protection.

WHAT THEY ARE SAYING:

Noah Barkin and Madeline Chambers in the Guardian: "Politicians may have felt Arcandor was more expendable than Opel as Germans are traditionally less emotionally attached to the retail and service sector than to the manufacturing branch, especially the auto industry. Whereas Germans are proud of their cars, they tend to shop at stores where they get the best bargain. Although Arcandor has Karstadt outlets in many high streets, the name has less resonance than the venerable German Opel brand."

Ian King in the Times: "[An offer by Rewe] seems improbable, despite the industrial logic of a pure-play German tour operator buying an Anglo-German one to establish an international presence. Even with sterling's current bargain-basement valuation against the euro, Rewe would be hard-pressed to raise the £2 billion-plus that Thomas Cook would fetch… A management buyout, led by Manny Fontenla-Novoa, the genial chief executive, would be a neat solution – but private equity backers will surely wait to evaluate the damage wrought by rising unemployment on the sector before backing such a deal." ·