First Choice Holdings plc has provided an exit for investors 3i and Royal Bank Development Capital on their investments in Crown, which was sold for GBP7 million and the assumption of GBP14 million of long term debt earlier this month.
Crown is a leading operator of leisure cruisers on the French waterways it also has operations in Germany, Holland, Ireland, and Italy. The company supplies holidays to customers in France, Germany, Switzerland, the UK and US. In total Crown provides holidays to approximately 50,000 customers each year.
3i first invested in Crown in 1990. It gave the company GBP500,000 in return for a 36 per cent stake in the business. This management buyout structure was necessitated by the need of Keith Gregory to buy out Geoffrey Watling, an angel investor in the business. At this time Watling, however, did not move out of the business entirely but retained a small shareholding. Later the same year a further GBP500,000 was made available by 3i, this time to fund acquisitions.
When in 1995 3i put the business on the market, offers from trade buyers were not particularly appealing. However, Royal Bank Development Capital, which has had notable successes in the leisure field Direct Holidays and Team Lincoln was interested and for GBP4 million it took a 47 per cent stake in the business. 3i’s stake was diluted to 22 per cent at this time. Duncan Johnson, assistant director at Royal Bank Development Capital, notes that the investment was made on the basis of the management team doing more of the same and moving the business beyond France into other European countries. This has been achieved.
Crown was advised by Cavendish Corporate Finance (Jonathan Buxton and Hugo Hadden-Grant) and Eversheds (Keir Barrie and Matthew Mace.)
First Choice is an acquisitive UK based company that is best known for the provision of charter flight and holidays. Crown has been acquired by First Choice’s Marine division. First Choice was in and out of the headlines last year after the European Commission prohibited its hostile acquisition by another UK tour operator, Airtours. Kuoni, the Swiss holiday operator consequently withdrew a friendly takeover offer announced at that time.