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JBR advises on the acquisition of Corendon

June 4, 2019

The private equity investor behind tour operator Sunweb has acquired Corendon, a Dutch travel operator with revenues of about €520 million. As part of the deal - financial details were not disclosed - Corendon will be integrated within Sunweb.

In December 2018, Sweden's Triton Partners took a majority stake in Sunweb Group, which serves some 1 million customers annually from its Sunweb, Jiba, GOGO, Husk, Eliza was Here and X-Travel brands. Together they offer bundled vacations to more than twenty destinations within Europe and the Mediterranean. With the addition of Corendon, the new Sunweb-Corendon combination will be a top three tour operator in the Benelux.

Securing the future

Corendon's founders, Atilay Uslu and Yildiray Karaer, have long been able to resist the temptation of losing their independence, but "this deal was simply too good to turn down," Uslu acknowledges in conversation with AD: "With this deal we are securing the future of Corendon.... and Corendon and Sunweb form a dream combination." Steven van der Heijden, Corendon's chief executive, describes the merger as a "natural and logical next step."

The deal will see Corendon's Dutch and Belgian tour operations (Corendon, Karin's Choice, Maris Life, Stip Reizen and GOfun) and Dutch airline operations transfer to Triton Partners. Founders Uslu and Karaer have retained a minority stake in the company, with Uslu staying on as a strategic advisor on the non-executive board. The airlines in Turkey and Malta and Corendon Hotels & Resorts are not part of the closed deal. Uslu and Karaer remain shareholders and CEO of these business units.

It was in 2000 when Uslu and Karaer founded Corendon, initially as a travel agency with a focus on vacations in Turkey. In 2005, the strategy was further developed, with the travel agency committed to becoming a full-service operator by adding an airline to its portfolio (Turkey). In the following years, Corendon launched airlines in the Netherlands (2011) and Malta. Meanwhile, the company also became active as a hotel operator, opening dozens of hotels in Turkey, the Netherlands, Ibiza and even as far away as Curaçao. Last year Corendon took care of the vacations of more than 750,000 people in the Benelux.

Shortly after Triton Partners acquired Sunweb, the investor contacted Uslu and Karaer. "They came to Amsterdam and we met in one of the Corendon hotels. It was love at first sight and there was an immediate click," Uslu recalls of that first meeting. To pursue the transaction, Corendon then assembled a deal team, which was led by the Onno Sloterdijk of JBR- a corporate finance firm that is a member of the Global M&A Partners network - and by M&A lawyers from STEK, an Amsterdam law firm.

More leeway

With worldwide revenues of €19 billion and €10 billion, respectively, the originally German TUI and the British Thomas Cook are the market leaders among recreational vacation providers. Looking at the Netherlands, TUI is about four times as large as Corendon in terms of revenue. However, the new €1 billion+ Sunweb-Corendon combination can "make a fist" against the two much larger tour operators, according to the two partners.

By joining forces, the two companies can consolidate their capacity in key destinations, such as Turkey and Greece. A fact that is essential, especially in a sector characterized by high volatility in demand and at the same time low margins. Having the necessary scale and flexibility to take advantage of vacation trends while operating efficiently is crucial for profitable operations, the partners say.

Although large mergers are often accompanied by major challenges, Uslu states that he is confident that the integration, partly due to the great similarities between the two organizations, will go smoothly: "We are both online driven, customer focused and have a clear price-quality strategy. We are both strong in the field of sun vacations and our main destinations, such as Turkey and Greece, complement each other.

"We are both online driven, customer focused and have a clear value for money strategy. We are both strong in the field of sun vacations and in addition our main destinations complement each other."

Uslu further emphasizes that the deal will not impact customers and employees - "on the contrary, this will give our people more opportunities. The headquarters will remain in Amsterdam and there will be no layoffs." Meanwhile, Triton's Swede Per Agebäck also points to the synergies that will result from the joining of forces. First, he points out that where Sunweb is very strong in winter sports, Corendon is adding its own airline to the future company. Second, the stronger financial muscle created by the deal will mean that the two companies have a "stronger platform for new investment, innovation and accelerated digitalization."

Innovation and new business models

The importance of investing in innovation and modern business models is demonstrated by recent developments at Thomas Cook. Britain's oldest 'packaged-holiday' provider is currently struggling financially, amid fierce online competition. After a series of profit warnings, the company saw its share price fall by 80% over the past year. The company is now undergoing a strategic reorientation, implementing a restructuring plan (guided by Alix Partners) and considering various merger and acquisition opportunities.

Reports in the Financial Times suggest that the company may be split up, with different bids for the tour operator division. That would give Thomas Cook room to shift its focus toward more investment in hotels that they own, a business line that tends to be more profitable.

At Corendon, the so-called 'closing period' started yesterday. In this period, the last outstanding topics will be completed such as approvals from the European Competition Authority and the advisory process of Corendon's works councils. Corendon hopes to complete the sale in the fall of 2019.

Onno Sloterdijk, associate at JBR Corporate Finance and Luuk Bruna, partner at Seasons Capital Partners, guided Corendon through this transaction.

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