Shares in travel firm Thomas Cook have plunged more than 40 per cent after it confirmed talks with its largest shareholder over a deal which would effectively hand over control of the company.

The firm said it is in advanced discussions with Chinese conglomerate Fosun over a £750 million cash injection, paving the way for a sale of its tour operator business.

Fosun and Thomas Cook's core lenders are considering proposals which would give the Chinese company a controlling stake in the group's tour business and a significant minority interest in its airline.

Shares dropped more than 44% in early trading following news of the proposals, which would drastically dilute existing shareholders.

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It follows recent reports that Fosun was eyeing up a deal which could lead to the complete break-up of the British travel firm, which is the world's oldest package holiday company.

Under the proposal, Thomas Cook is looking for a £750 million cash injection from Fosun and its lending banks.

Existing shareholders will be significantly diluted as a result of the plans, although they will be offered the option to invest as part of the recapitalisation.

A spokesman for Fosun said: "Fosun is a shareholder in Thomas Cook, because it is a British company operating in the global travel industry, in which we have extensive experience.

"We are committed investors, with a proven track record of turning around iconic brands including ClubMed and Wolverhampton Wanderers FC."

Thomas Cook chief executive Peter Fankhauser said: "After evaluating a broad range of options to reduce our debt and to put our finances onto a more sustainable footing, the board has decided to move forward with a plan to recapitalise the business, supported by a substantial injection of new money from our longstanding shareholder, Fosun, and our core lending banks.

"While this is not the outcome any of us wanted for our shareholders, this proposal is a pragmatic and responsible solution which provides the means to secure the future of the Thomas Cook business for our customers, our suppliers and our employees."

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The company added that the sale process for its airline had been "paused" while the funding takes place.

WPP has proposed to sell a majority stake in its subsidiary Kantar, in a deal which values the data business at more than £3 billion and will see £1 billion returned to shareholders.

Bain Capital, an American private equity firm, will acquire a 60% stake in Kantar under the proposed transaction terms, with proceeds for WPP expected to be 3.1 billion US dollars (£2.5 billion).

Overall the sale would value Kantar, a data and insights company with more than 30,000 employees globally, at 4 billion US dollars (£3.2 billion).

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WPP said around 60% of proceeds will be used to reduce debt, but about 1.2 billion dollars (£1 billion) will be returned to shareholders.

However, the transaction would negatively affect WPP's earnings in 2021, as Kantar accounts for around 15% of the group's overall sales.

WPP chief executive Mark Read said: "This transaction creates value for WPP shareholders and further simplifies our company. With a much stronger balance sheet and a return of approximately 8% of our current market value to shareholders planned, we are making good progress with our transformation."

It is the latest disposal announced by the advertising and media giant, coming less than two weeks after the sale of its 25% stake in sports marketing agency Chime.

WPP also offloaded a majority stake in its post-production business The Farm, which worked on hits including ITV's Downton Abbey.

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Since the departure of former boss and founder Sir Martin Sorrell last year, the company's new management has vowed to sell off non-core divisions.

Shares in car dealership Lookers have gone down after the company issued a profit warning and said the tough market would continue through the year.

Underlying pre-tax profits are now set to be £32 million for the first half, compared with £43 million in the comparable period last year.

Although the first quarter was positive, trading in the three months to June 30 was "increasingly more challenging" against a backdrop of declining new car sales in the UK.

Weaker demand in the used car market also affected performance.

Shares in the company were down 25% in early trading on Friday.