Cox & Kings to buy UK's Holidaybreak for $511.3 mln

Indian tour operator Cox & Kings Ltd will buy British specialist travel company Holidaybreak for 312 million pounds (USD 511.3 million) in cash, helping it meet the growing demand for education travels.

Holidaybreak provides educational and activity trips for school children in Europe.

"It's a very defensive and recession-proof product. We believe that educational travel is the way to grow in the future," Cox & Kings executive director Peter Kerkar said.

Cox & Kings expects the acquisition to boost its earnings, its Chief Financial Officer Anil Khandelwal said.

The company, the parent of UK-based unlisted Cox and Kings, gets around half its overall revenue from its international operations and has been looking at overseas acquisitions to tap the booming outbound market and drive future earnings growth.

The Indian outbound travel market could expand to USD 35-USD 40 billion over the next five years from the current USD 12 billion buoyed by a rapidly growing organised tourism market, a senior Cox & Kings official had said earlier this year.

The deal, which Cox & Kings said would be the largest overseas acquisition by an Indian company in the sector, has the support of major Holidaybreak shareholders owning about 31.8% of its issued capital.

On Tuesday, Holidaybreak said it was in discussions with Cox & Kings for a cash offer of 432.1 pence per ordinary share, a premium of 18% to the stock's close on Monday.

"It looks like a good price, but not a great price...but I suppose markets are as they are and it's a cash offer and they may as well take it," David Gorman, analyst with Milkstone, told Reuters.

Cox & Kings, which traces its roots back to the 18th century when it was established to cater to the British forces, has operations in countries including Australia, United States, Germany, Hong Kong, Greece and Singapore.

Cox & Kings will continue to look at smaller acquisitions of specialised travel firms across the globe, Kerkar said.

The deal, expected to close by Sept. 27, will be funded with 125 million pounds from Cox & King's cash reserves and the remaining will be raised as debt from India's Axis Bank.

Cox & Kings, which has a cash balance of about 11 billion rupees (USD 249 million), will also assume Holidaybreak's debt of 14.9 billion rupees as part of the deal, CFO Khandelwal said.

Cox & Kings shares closed down 3% at 192.9 rupees on the National Stock Exchange. Holidaybreak shares were up 3.83% at 427.25 pence on the London Stock Exchange.

(USD 1 = 0.610 British Pounds)