German travel and shipping giant TUI has proposed an all-share merger with its majority-owned British business to cut costs and strengthen its focus on tourism.
Sources said TUI’s main shareholders were interested in a reverse takeover by UK-based TUI Travel that might offer a premium to the parent firm’s share price.
However, the UK-listed firm, which is 56.4 per cent owned by TUI, stressed in a statement that any deal would be an all-share merger under which neither set of shareholders would get a premium.
TUI Travel – Europe’s largest tour operator, which was formed in 2007 through the merger of TUI’s travel business and Britain’s First Choice – said talks were at an early stage. It added that, under UK takeover rules, the German group must make a firm proposal by the close of business on 13 February or walk away.
While TUI Travel comprises the whole tour operating business of the travel group, TUI also has hotels and luxury cruise operations as well as a stake in container shipper Hapag-Lloyd.
Since TUI decided in 2008 to shift its focus away from shipping and sell a majority stake in Hapag-Lloyd, its shareholders have been looking at ways to combine with TUI Travel to cut costs and pool resources, such as hotels, the sources added.
“The idea is to bring two companies that operate in the same industry together. It is a story of synergies,” one source said.
Both groups currently have their own headquarters – in Hanover, Germany, and London.