Thomas Cook shares were subject to a buying frenzy this morning, after the travel company announced Chinese conglomerate Fosun had taken a 5% stake for £91.8m. You'd expect the share price to increase correspondingly, but it instead rose a staggering 19% to 143.6p in mid-morning trading. Clearly this was no mere asset purchase.
Investors no doubt took some of their enthusiasm from Thomas Cook itself. Chairman Frank Meysman said he was 'delighted' to announce the new partnership, which was 'designed to bring significant benefit to Thomas Cook and its shareholders'. It certainly makes a nice change given the way the shares have languished since Harriet Green left. But who are these new partners, and what do they want?
Like most Chinese firms, Fosun is little known in the West, though it is in fact one of the country's most outward-facing businesses. Founded in 1992 by a philosophy graduate and three genetic engineers at Fudan University, it has risen to become China's largest privately-owned conglomerate, listed on the Hong Kong stock exchange since 2007.
To say its interests range widely is an understatement. Fosun has grown from its pharamceutical and real estate roots in China, and is now involved in such varied businesses as banking, mining, steel, insurance, medical care and online games.
Chairman and majority shareholder Guo Guangchang told the BBC last year that he has visions of being a Chinese Warren Buffet. Although Fosun isn't quite Berkshire Hatthaway yet (it's worth $8bn, or £5.2bn, according to Forbes, compared to $309bn for Buffet's beast), it's making progress.
Since 2010, the company's further diversified by making investments abroad, buying Portuguese insurer Caixa Seguros last year for €1bn (£725m) as well an American luxury knitwear label (St John), a Greek jeweller (Folli Follie), a Malaysian restaurant chain (Secret Recipe), a New York skyscraper (One Chase Manhattan Plaza), a Hollywood film studio (Studio8) and French all-inclusive resort Club Med.
What does it want with Thomas Cook?
The last named investment is the important one here. In its statement this morning, Thomas Cook said there were 'collaboration opportunities with Fosun's other travel and leisure businesses, including Club Med'.
The firm went on to say there were opportunities for to utilise Thomas Cook's 'extensive destination management organisation' to help funnel Chinese tourists to Europe (particularly Club Med) and Russia. Well, at least it's cheap there these days.
Thomas Cook also said it would develop Thomas Cook's tour operator activities for Chinese tourists within China, and develop 'concept hotel brands tailored to the Chinese leisure market'. A theme appears to be developing here...
Fosun calls itself a 'China expert with global capacity', a bridge between the country and the world, helping foreign firms get a finger in the vast Chinese pie. One of its key markets is tourism, and it's a big one - in 2013, Chinese tourists spent $130bn, a figure that is only going to go up.
Thomas Cook said Fosun intends to buy another 5% share on the open market in due course, which obviously won't have hurt the stock, but its dramatic rise this morning shows investors view collaboration between the two companies as potentially very lucractive.