The Co-operative Group has confirmed the sale of its travel division to Thomas Cook, its joint venture partner, securing an £82m windfall.
Fellow mutual Central England Co-operative will receive £5.8m for its 3.5% stake in the venture under a deal agreed six years ago.
The Co-op group will receive £50m for its 30% stake in the business by November next year and £32m in dividends in two payments between January and April next year.
The mutual has already received £5m of £37m in dividends that it was originally promised between October and December this year. It plans to spend the cash on its revival plans including revamping grocery stores and improving its membership scheme
The anticipated windfall comes at a useful time for the group, which is halfway through a three-year turnaround programme after its bank came close to collapse in 2013, threatening the existence of the entire group. Pre-tax profits more than halved to £17m in the first six months of 2016 after restructuring costs and price cuts amid a competitive grocery market.
Rod Bulmer, chief executive of consumer services at the Co-op, said: “We have enjoyed a successful partnership with Thomas Cook through the joint venture. Going forward, having a minority stake in a travel business does not fit with the strategy of the Co-op.”
Thomas Cook said it would take full control of the venture’s 764 high street travel agencies next November. Some of the stores are branded Thomas Cook and some Co-operative Travel. The travel group said it would all now move under its banner. It has the right to use the Co-op brand until November 2018 but even after that point the Co-op Travel brand will not completely disappear from the high street.
There are dozens of travel agencies run by regional co-operative groups around the country which are still entitled to use the name. Central England Co-operative operates 20 travel outlets which are not included in the joint venture with Thomas Cook, and these will continue to operate.
