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TUI AG, TUI Travel Agree on All-Share Deal in Combination

Published on Sep 15 2014 9:18 AM in General Industry

TUI AG, TUI Travel Agree on All-Share Deal in Combination

TUI AG and TUI Travel Plc lifted the benefits they aim to reap from their planned all-share merger after the boards of both tour operator recommended its shareholders to accept the offer.

The combined entity, valued at about €6.5 billion, will realise €100 million from the combination via tax savings and benefits from eliminating overlapping functions and separate stock exchange listings, compared with €80 million projected previously, TUI Travel said in a statement.

The deal would remove the biggest obstacle in TUI AG’s corporate structure 1 1/2 years after Friedrich Joussen took over as chief executive officer. Joussen, who restored the company’s ability to pay a dividend after investors came away empty-handed for years, plans to create the world’s largest tourism business and run it together with TUI Travel CEO Peter Long until taking the sole helm from 2016.

“Significant operational and financial benefits are expected by the vertical integration which enables further efficiency gains and growth owing to a new group structure,” TUI AG supervisory board chairman Klaus Mangold said in the statement.

The new company will be listed on the London Stock Exchange, with a secondary quotation on Germany’s market, the companies said. TUI Travel shareholders, including TUI AG, will receive a second interim dividend of 20.5 pence per TUI Travel share. TUI AG will propose to its board a dividend of 0.33 euros for the fiscal year ending 30 Sept., after paying 0.15 for last year.

Shareholders of TUI AG will have to approve the proposal at an extraordinary meeting at the end of October, as must a least 75 per cent of TUI Travel shareholders.

Under the proposal made 27 June, outside shareholders in TUI Travel will receive 0.399 of a share in the combined entity for each share in the UK travel operator that they currently own. Investors in Hanover, Germany-based TUI AG will hold 54 per cent of combined company and TUI Travel shareholders the remaining 46 per cent.

Bloomberg News, edited by Hospitality Ireland

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