The time has come. Hot on the heels of its half-year results, Tui Travel (TT.) has confirmed a merger with its German parent company, Tui AG (TUI). A permanent tie-up between the two companies has been long-suspected, particularly since the original merger of Tui's First Choice package holiday business with the tourism arm of Tui AG back in 2007.
But a successful deal fell through 18 months ago when the two companies failed to agree terms. In the aftermath, long-standing Tui Travel chief executive Peter Long even declared that a merger would "never happen". But the two companies have managed to grow over the past two years, and with fresh management over at Tui AG, Mr Long has reconsidered his position.
Now, he will become joint chief executive of the enlarged group with Friedrich 'Fritz' Joussen, currently head of Tui AG, which holds a 54.5 per cent stake in Tui Travel. Tui Travel's shareholders will receive 0.399 new Tui AG shares for each share they own, while other benefits of the deal include cost savings of £36m and a £28m tax gain.
But analysts at Numis warned shareholders to be "unenthusiastic" about the merger, as the agreed terms risk possible dilution.
