The merger, if consummated, is anticipated to deliver a number of strategic and financial benefits for both the TUI Travel shareholders and TUI AG shareholders.
The Independent Directors of TUI Travel and the Executive Board (Vorstand) of TUI AG are pleased to announce that they have reached an agreement in principle on the key terms of a possible all-share nil-premium merger of TUI Travel and TUI AG. The merger, if consummated, is anticipated to deliver a number of strategic and financial benefits for both the TUI Travel shareholders and TUI AG shareholders.
Strategic Highlights
- Creation of the world’s number one integrated leisure tourism business
- Continuation of existing strong leadership
- Significant synergies through combining the two businesses
– Potential cost savings of at least €45 million (£36 million) per annum, in addition to certain cash tax benefits
– Top line growth expected to be enhanced by broadening the portfolio of unique holiday experiences, increased occupancy levels in existing hotels, the future expansion of TUI AG’s core hotel and cruise activities and integrated yield management - Simplification of the current group structure to unlock further value within the businesses of the combined TUI AG and TUI Travel group
- Acceleration in the growth of the Core Mainstream Tourism Business
– An enhanced growth profile from a broadened content portfolio and increased investment in digital platforms to drive accelerated growth in customer numbers – Non-core businesses will be run separately and maximised for value
– The current Online Accommodation businesses and Specialist and Activity sector of TUI.
Travel will operate separately from the core tourism business and opportunities to maximise their value for the Group will be actively pursued o Hapag-Lloyd stake to be held for disposal.
Key Terms
- Under the terms discussed between the parties, TUI Travel shareholders (other than TUI AG and certain connected parties) would receive 0.399 new TUI AG shares for each TUI Travel share that they own-German domiciled Group with a premium listing on the London Stock Exchange with an intention to seek inclusion in the FTSE UK Index Series (including FTSE 100), in parallel to a quotation on a German stock exchange
- Intention to adhere to both the UK Corporate Governance Code and the German Corporate Governance Code to the extent practicable. The Group is expected to be subject to the shared jurisdiction of the UK Takeover Code and applicable German takeover law.
- TUI AG and TUI Travel expect that any dividends paid for the 2013/2014 financial year would ensure equivalent payment to TUI AG and TUI Travel shareholders, taking into account the exchange ratio and would be in line with the current TUI Travel dividend policy
- The Group intends to review its future dividend policy following completion of the Merger and in light of its expected profits and free cash flow generation, targeting a level which is in line with TUI Travel’s current dividend policy.
Mr. Alexey Mordashov, the largest shareholder in TUI AG, has indicated his support for the Merger. Discussions remain ongoing and there can be no certainty that an offer will be made or as to the terms of any offer.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
