Thomas Cook has confirmed it has been approached by private equity firm Triton Partners over a takeover of its Northern Europe business.

Talks between the two sides are at a very early stage but the deal, should it go through, would include Thomas Cook’s tour operator and airline in Norway, Sweden, Finland, and Denmark.

“The group is currently evaluating this offer alongside the ongoing strategic review of its Group Airline, announced in February 2019,” Thomas Cook said in stock market announcement after Sky News first reported the story.

Selling the Northern European unit would likely mean splitting any potential airline sale. Thomas Cook has three main airlines. One operates in the United Kingdom, the second in the Nordics, and the third in Germany, under the Condor brand. Lufthansa has already expressed a particular interest in buying the latter.

Earlier this year Triton completed a deal to buy European tour operator Sunweb.

Corporate Break-Up

Beleaguered Thomas Cook has seen its shares lose around 75 percent of their value in the past few months as the company struggled with difficult trading conditions. It made a pretax loss of $1.8 billion (£1.5 million) in its most recent half-year results, which also showed its net debt had increased to $1.6 billion (£1.2 billion).

On Thursday two ratings agencies, Fitch and S&P, both downgraded Thomas Cook’s stock, reflecting the perilous situation the company finds itself in.

Selling the group airline business and the Nordics division would likely help shore up Thomas Cook’s balance sheet and give it some breathing room, but it is difficult to see what it would do next.

Would it continue to break itself up in a piecemeal process, like Kuoni did, or would it continue as a UK and central-European focused tour operator?

The Northern Europe business includes the country-specific tour operator brands Ving, Spies, and Tjäreborg. The business is smaller than those in the UK and Continental Europe, and in 2018 made it $1.6 billion (£1.3 billion) in revenue but is more profitable than both with underlying earnings (EBIT) of $120 million (£95 million).

As well as its profitability, the business doesn’t have the drain of a retail store presence in the market like it does in the UK and elsewhere in Europe.

Photo Credit: A Thomas Cook Airlines tail fin. The company has had an approach for its Northern Europe division. Thomas Cook