Thomas Cook India, which is owned by Canada-based billionaire PremWatsa, has announced that it will soon merge with Chennai-based resort company Sterling Holiday Resorts.

Thomas Cook Managing Director Madhavan Menon said on Saturday that the company will make a preferential allotment investment of Rs 187 crore at Rs 90.49 a share, which is 2.7 per cent discount to Sterling's Friday closing price of Rs
92.90, in the Chennai resort. After the deal, Thomas Cook will hold around 23 per cent stake in the company.

Thomas Cook will also acquire Rs 176 crore from Sterling's existing shareholders including Bay Capital, investors Sidharth Shankar, Dhanalaxmi S and Rakesh Jhunjhunwala at the rate of Rs 98 a share. In the third phase, Thomas Cook will launch an open offer for buying up to 26 per cent in Sterling Holiday for Rs 230 crore.

"This is a win-win deal for both of us. Thomas Cook will be able to sell Sterling resorts to its own customers. We will have one more service to offer to our customers," Menon said.

Sterling Holiday Managing Director Ramesh Ramanathan said Sterling Holiday will be able to expand with more resorts and also renovate the existing facilities. The company also said that it will be able to build a strong brand image with the investment.