Trade buyers, private equity firms eye Thomas Cook

By Matt Scuffham

LONDON (Reuters) - Stricken German retailer Arcandor's (AROG.DE) 53 percent stake in travel firm Thomas Cook (TCG.L) looks likely to be sold to either a trade buyer or a private equity group, possibly acting with its management.

Arcandor on Tuesday filed for insolvency after the German government rejected a request for state aid, effectively bringing Thomas Cook, Europe's second-biggest tour operator, into play as a takeover target.

German retailer Rewe immediately expressed an interest in acquiring the stake in Thomas Cook and combining it with its own tourism division but would likely have to settle for being a junior partner in a merger of the two businesses.

Analysts say the only other realistic trade partner would be Switzerland's Kuoni (KUNN.S) although the strategic fit is less compelling than a tie-up with Rewe.

"Kuoni's strategy remains focused on upscale, tailor-made products, unlike Thomas Cook's more mass-market-orientated products," said Exane BNP Paribas analyst Matthias Desmarais.

A price tag above 2 billion pounds ($3.28 billion) could also prove prohibitive for the Swiss group, analysts say.

A tie-up with Europe's biggest operator TUI Travel (TT.L) would face major, and probably insurmountable, competition hurdles as the two groups already control around half of the market across Europe.

Thomas Cook Chief Executive Manny Fontenla-Novoa said on Tuesday the group had not received any approaches and is not in talks with any groups in relation to either the acquisition of the Arcandor stake or an offer for the whole company.