25th Jul 2014 14:42
LONDON (Alliance News) - TUI Travel PLC Friday said its merger discussions with German parent TUI AG have been extended to September 19.
Last month, TUI AG said it planned to buy the minority of UK-based holiday operator TUI Travel that it does not already own in a deal worth about GBP2 billion, a move that ends years of speculation that TUI would eventually take full control of its UK-listed travel unit.
TUI AG originally had until Friday to either announce a firm intention to put forward a firm merger proposal to shareholders or walk away. It requested and was granted the extension until September 19 by the UK Takeover Panel, it said, while providing no reason for the delay.
TUI Travel was formed in 2007 after TUI AG agreed to merge its travel business with First Choice Holidays PLC of the UK. At that time, TUI had a 51% stake in the combined company while First Choice shareholders owned 49%. Since then, analysts have speculated that TUI would one day buy out what effectively became its British travel unit.
For TUI, the deal would bring together the travel business with its existing hotels and resorts business and its cruises joint venture with Royal Caribbean Cruises Ltd. TUI also has a leftover stake in container shipping business Hapag-Lloyd, but wants to sell it having sold a majority stake in 2009.
On June 27 TUI Travel, the owner of Thomson and First Choice, said the all-share, nil-premium merger, would deliver a number of strategic and financial benefits, including potential costs savings of at least EUR45 million per year, largely because there will be no duplication of head offices.
The combined company would be headquartered in Germany, but would be listed on the London Stock Exchange, where TUI Travel is already a FTSE 100 constituent, in parallel with a German listing.
TUI Travel has a market value of GBP4.08 billion, while TUI AG has a market capitalisation of around EUR3.04 billion, giving the combined firm a market value of around EUR5.57 billion at current prices.
Under the terms of the deal being discussed, TUI Travel shareholders would receive 0.399 new TUI AG share for each TUI Travel share they own. TUI Travel said Alexey Mordashov, the largest shareholder in TUI AG, supports for the merger.
TUI Travel shares were quoted down 0.9% at 365.30 pence Friday afternoon.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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