The transaction is expected to be completed by December 2014 after obtaining mandatory clearances.
“The synergistic opportunities this new partnership offers are enormous because they create multiple avenues to grow our respective businesses and to create valuable business opportunities together,” TCIL managing director
Madhavan Menon said.
Sterling Holiday is valued at Rs 870 crore, Menon said. After the merger, the Chennai firm will continue operations under the leadership of Sterling Holiday managing director Ramesh Ramanathan with an independent board.
Sterling will cease to exist as a company but will continue as a brand.
"We have no intention to integrate the Sterling brand into Thomas Cook," Menon added. Ramanathan said the merger will boost Sterling's market position as there are multiple natural synergies that will benefit both companies.
"Thomas Cook customers will have access to our pan-India network of well-located, full-service, quality resorts, which offer great holiday experiences," he added.
A senior Thomas Cook executive said Bay Capital, an investor in Sterling, will have around 2% equity in the merged entity. Based on the equity investments and merger ratios, the aggregate value of the two companies is estimated at about Rs 3,000 crore, they said in a statement.