TUI Travel, TUI AG agree merger terms
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TUI Travel and TUI AG have agreed terms over a merger that would mean a combined value of EUR6.5 billion (GBP5.2bn, US$8.42bn).
The merger is expected to result in the existing TUI Travel shareholders owning 46% of the combined group and the existing TUI AG shareholders owning 54%.
Alexey Mordashov, TUI AG’s largest shareholder has confirmed his support for the merger.
He said: “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.”
The two companies announced they were in talks over a merger back in June that would see the two look to grow exclusive hotel and cruise content and integrate their mainstream operations.
Peter Long, chief executive of TUI Travel will be joint CEO of the combined group with Friedrich Joussen before becoming chairman of the supervisory board. Joussen will then be the sole CEO of the group from February 2016.
Long said: “The merger will strengthen and future-proof our combined business by enhancing the certainty of long-term unique holiday growth, and by reinforcing our competitive advantage through further control over the end-to-end customer experience.”
Joussen added: “We have conducted the negotiations goal orientated, seriously and fairly and have completed them successfully. The result is a clear and joint commitment to the merger of the companies. The potential cost savings are significantly higher than expected at the start of the negotiations. The new TUI will be the leading integrated tourism group in the world and an innovative pioneer in the industry.”
The merger is expected to generate cost savings of at least EUR45 million (GBP36m) per annum including GBP16m savings through integrating inbound services into its mainstream business.
Its forward strategy would also look to grow the online accommodation, specialist and activity arms while also look to dispose TUI AG’s stake in Hapag-Lloyd AG.
Sir Michael Hodgkinson, deputy chairman and senior independent director of TUI Travel, said: “The board of TUI Travel is focused on delivering shareholder value and I and my fellow independent directors are confident that the finalised terms of this merger represent significant value for our shareholders.
By simplifying the structure and combining the two businesses substantial synergies and cost savings will be realised. In addition, the potential to deliver material commercial benefits will be unlocked.
Peter Long’s position as, firstly joint chief executive with continued responsibility for the former
TUI Travel businesses, and then in 2016 as chairman of the supervisory board should also serve to give TUI Travel shareholders confidence in the long-term prospects for the group.”
Prof. Dr Klaus Mangold, chairman of the supervisory board of TUI AG, said: “The supervisory board of TUI AG strongly endorses the merger of the two companies. Significant operational and financial benefits are expected by the vertical integration which enables further efficiency gains and growth owing to a new group structure.
“The listing of the TUI AG shares on the premium segment of the London Stock Exchange and the FTSE UK Index makes the shares attractive for international investors, the euro listing on the Frankfurt Open Market secures market access in Germany and emphasises the international nature of the group. With this euro listing on a German stock exchange we want to ensure that TUI AG shares will remain an attractive investment for private investors. Further, the newly formed integration committee of the supervisory board of TUI AG will actively accompany the phase of re-orientation and the merger of both companies as well as attend to the aspired benefits.”
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