TUI merger on the cards

TUI AG and UK subsidiary TUI Travel have announced plans to merge following years of speculation.

The two companies said the deal would allow them to create ‘the world’s number one integrated leisure tourism business’ with savings of around GBP36 million a year and the chance to improve occupancies at its hotels.

A statement from the two also mentioned the opportunity to grow its holiday experiences, hotels and cruises and enhance its digital platforms to increase customer numbers. In the 2012/13 financial year the mainstream business saw revenue of GBP13, 426m excluding inbound services and EBITDA of GBP706m.

The online accommodation businesses and specialist brands would operate separately, while it could sell off the Hapag-Lloyd brand.

TUI AG’s largest shareholder Alexey Mordashov has indicated support for the merger, with discussions ongoing.

“I am pleased with the recent business development of both companies. The combination will serve to improve the tourism business model and help drive future business growth for the benefit of both shareholder groups,” he said.

A statement from the two said “there can be no certainty that an offer will be made or as to the terms of any offer” although it also detailed who would be on the board.

Under the merged company the supervisory board will grow from 16 to 20 members with an equal split between the two and between employees to shareholder.

Professor Klaus Mangold and Michael Hodgkinson would be co-vice chairman with Frank Jakobi, with Peter Long and Friedrich Joussen as joint chief executives until February 2016. It is expected that Long will become chairman of the board after this with Joussen as sole CEO. Other members of the board would include Johan Lundgren as deputy group CEO mainstream; William Waggott as CEO of online accommodation and the specialist and activity sector, as well as Horst Baier as group CFO and Sebastian Ebel responsible for all group platforms and processes including hotels, cruises and IT.