VENTURES: Cullinan Takes Shine To Ikapa
Recent Western Cape Business News
CULLINAN Holdings, the listed leisure group, last month proposed another sizeable acquisition in the Cape. Cullinan, which owns the well-known Thompsons brand, has offered to buy a 56% stake in Cape Town-based Ikapa Tours – a popular inbound tour operator.
The Ikapa deal is Cullinan’s second big acquisition in Cape Town in recent years. In late 2006 the company took over Hylton Ross Tours.
The latest acquisition is rather surprising since the seller of the 56% stake is the Don Group, a specialist suite hotel owner that only recently acquired a controlling stake in Ikapa Tours in mid-2009 for just over R7 million.
Don initially hoped Ikapa would drive occupancies in its hotels, which have struggled for viability over the last decade.
It is not clear why Don decided so suddenly to let go of Ikapa since the Cape company appears to have fared reasonably in weak market conditions.
Interim results for Don to end December 2010 showed Ikapa generating revenues of some R20 million and a small loss of less than R300 000.
Cullinan has not disclosed what it will pay for the 56% stake in Ikapa. But indications are that the transaction did not dent the company’s bank account since no official notification was even given to shareholders about the Ikapa deal.
There is talk, though, that Cullinan will look to increasing its stake in Ikapa.
Taking 100% of Ikapa would make sense for Cullinan as the inbound tour operator would complement existing operations.
Cullinan already has extensive tour operations and coaches, and Ikapa will be able to work alongside Cullinan’s existing Cape-based coach business, Hylton Ross.
Ikapa owns a fleet of 20 luxury bus liners, and it appears the enlarged coach business is set for an extensive upgrade.
According to a report in Business Day, Cullinan CEO Michael Tollman said that as a result of the Ikapa transaction the company would have a state- of-the-art coach depot.
This would include a facility for undercover parking for all coaches, together with maintenance shops to ensure consistency of service and fleet quality.
Cullinan intends spending R20 million to R30 million on upgrading and expanding the coach depot in Salt River.
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