UK’s Tui Travel agrees merger with its parent
UK company TUI Travel yesterday agreed the terms of its all-shares merger with its German parent TUI, creating the biggest integrated leisure tourism group.
The combined group would be based in Germany, TUI said, with a premium listing on the London Stock Exchange and a secondary listing in Germany.
The deal, which would need the approval of 75 per cent of existing TUI Travel shareholders, would leave 46 per cent of the new company in their hands, with the remainder controlled by TUI stakeholders.
“The merger will strengthen… our combined business by reinforcing our competitive advantage through further control over the end-to-end customer experience,” TUI Travel chief executive Peter Long said in a joint statement.
His TUI counterpart Friedrich Joussen noted that the potential cost savings were “significantly higher than expected at the start of the negotiations”. According to the statement, the new TUI Group is expecting to cut costs by €45m (£35m) a year, and would have a combined market value of €6.5bn.
More than 80 per cent of TUI’s earnings are generated from TUI Travel. However, excluding the London-listed subsidiary, the hotels and cruise businesses owned by the German company also showed strong improvement in the third quarter.
Joussen and Long would be joint chief executives of the new group until February 2016, at which point Joussen will become sole head.
As part of the deal, Tui Travel shareholders would receive an interim dividend of 4.05p per share, plus a second dividend of 20.5p per share before completion.