British travel company Thomas Cook Group reached an agreement to acquire a 50.1% stake in Russian travel company VAO Intourist.
The joint venture will include Intourist’s outbound, domestic and inbound tour operator businesses as well as its retail travel network.
Intourist was founded in 1929 and privatized in the early 1990s. In 2009, Intourist carried over 650,000 passengers. The company has a network of 144 retail locations throughout Russia.
Thomas Cook will initially acquire a 50.1% stake in the new joint venture, for a maximum of $45 million, including a $10 million cash payment and $35 million in Thomas Cook shares.
Intourist’s existing management team will remain in place, including President Alexander Arutyunov. Thomas Cook will select a new CFO. Denis Wathier, CEO of Thomas Cook France, will become chairman of the joint venture.
The joint venture is conditional upon antitrust clearance in Russia and certain other conditions, and is expected to be completed by February.
The goal, according to Thomas Cook, is to grow sales by expanding controlled distribution in Moscow, St. Petersburg and in other regions of Russia and the former Soviet Republic.
The move is part of Thomas Cook’s strategy to capitalize on emerging markets, including the "fast-growing Russian market which has strong demand for beach and family holidays, particularly to Turkey and Egypt," the company stated in a news release.
Thomas Cook is also hoping that the joint venture will give it additional purchasing power in key destinations.
Thomas Cook said it expects the Russian market to grow by double-digit percentages in the coming years. Thomas Cook cited increasing wealth among Russia’s population of 142 million and strong economic growth driven by the natural-resources sector as the reasons behind Russia’s market potential.