German-owned travel firm Thomas Cook is to buy British package holiday rival MyTravel. The new company will be headquartered in London and listed on the stock exchange there.
In response, MyTravel’s shares jumped more than 30%, making the combined group worth around 4.2 billion euros. As a result of the merger, they are predicting cost savings of 112 million euros a year.
The combined firm’s annual revenue should be about 13 billion euros, meaning they will close in on Europe’s largest travel operator, TUI, which had sales of 20.5 billion euros last year.
Because of the merger MyTravel said it has abandoned its earlier plans to take over the third largest player in Europe, Britain’s First Choice.
The new company will operate under the Thomas Cook name, taking around 19 million people on holiday annually.
The package holiday industry is consolidating to counter a decline in business as growing numbers of people put together their own trips using the internet and low-cost airlines.
MyTravel came close to collapsing under heavy debt in 2003 but has since returned to profit after it cut costs, closed shops and reduced the number of holidays it sells.
Thomas Cook went through similar cost cutting and made a profit last year for the first time in four years.