The markets seem largely unimpressed with the news that Thomas Cook (TCG) and its Chinese backer Fosun (0656:HK) have formed a joint venture to develop the tour operator's domestic, inbound and outbound tourism activities for the Chinese market. Yet it is clear that the deal has significant upside for the world's oldest travel agent going forward.

Share in the £2 billion cap have barely budged, nudging only 1p higher, 0.7%, to 139.9p, a pretty dismal showing. But the market is missing the point. This deal has the potential to combine Thomas Cook's extensive brand heritage, know-how and expertise in international travel with Fosun's in-depth local market knowledge. The upside for the UK company could be considerable if it can execute direct exposure to China's growing demand for leisure travel, both domestically and internationally.


The joint venture, which will owned 51%/49% in Fosun's favour, will be based in Shanghai with both partners contributing £1.6 million in cash to support the initial start-up phase. The doors to business should be flung open by this Autumn.

When last we covered Thomas Cook – following the announcement of a strategic partnership with Fosun on 6 March – Langton Capital reckoned the new working relationship with Fosun would be a ‘potential game-changer’ for Thomas Cook. Analysts noted the 174 million Chinese citizens that could be travelling abroad by 2019, versus 10 million in 2000. That's quite the growth opportunity.

Issue Date: 15 Jun 2015