UK tour operator TUI Travel (TT.) and its German parent, TUI AG (de:TUIX), have released the agreed terms of their planned merger. The tie-up will create the world’s biggest tour operator with a combined market value of £5.2bn. The enlarged company is thought likely to enter the FTSE100 in London while maintaining a secondary German listing.
TUI Travel's shareholders will receive 0.399 new TUI AG shares for each share held. That suggests an offer that's worth about 355p a share, below the current 366p share price and a notable discount to the 404p share price on the day merger talks were announced (27 June). The deal needs the approval of 75 per cent of TUI Travel's shareholders and, if successful, will gives them a 46 per cent stake in the combined group.
But it should deliver cost savings of around €45m (£36m) a year and, as single company, could also mean tax saving of up to €35m. "We see the proposed merger as 10 per cent accretive to combined EPS based on guided synergies," reckons analysts at JP Morgan Cazenove.
The move has been mooted since 2007 when TUI Travel was created from the merger of the UK's First Choice holiday business and TUI AG's travel arm. TUI AG approached TUI Travel last year about a potential tie-up, but talks collapsed.
