European travel company TUI Group announced on Thursday that it had come to an agreement with private equity group Cinven and the Canadian Pension Plan Investment Board to sell its Hotelbeds Group for 1.19 billion euros ($1.3 billion).
Hotelbeds, which is TUI’s wholesale hotel-room booking business provides bookings for travel agencies and package sellers in over 120 countries. As the business was run independently of TUI’s core business it has been sold as a none core asset. During the financial year ending September 30th, Hotelbeds reported revenue of €1.06 billion..
“This is a very successful transaction — a good deal for the future of Hotelbeds and for TUI Group shareholders as well as our continued growth in our core tourism business,” Friedrich Joussen, the TUI chief executive said in a statement.
Cinven and CPPIB made a statement together outlining that they believed the deal offer good value based on the company’s strong financial performance and growth across the market whilst there are new market consolidation opportunities.
Chris Good, Senior Principal at Cinven said:
“Hotelbeds has demonstrated exceptional growth and built an outstanding market position as a result of its market-leading proprietary technology and strong customer and supplier relationships.”
“Its focus on diversifying into new market segments is proving highly successful and generating impressive growth rates in all of its new ventures.”
TUI has indicated that it will be using the proceeds of the sale to increase growth opportunities in its core travel business and to strengthen it’s on hand cash.
The sale is subject to approval by the regulatory body and is expected to be finalised by the beginning of October.
TUI’s organisation incorporates travel agencies, tour operators, airlines, hotels and cruise lines which employ 76,000 people. includes tour operators, travel agencies, airlines, hotels and cruise lines. The company employs about 76,000 people.