15th Sep 2014 08:44
LONDON (Alliance News) - TUI Travel and German parent TUI AG revealed the details of their proposed merger Monday, which will see TUI Travel shareholders own a 46% stake in the combined group that will have a fully-diluted equity value of around GBP5.2 billion.
Travel operator TUI Travel, which owns Thomson and First Choice, has been in the process of merging with its German parent TUI AG, after TUI AG said in June that it planned to buy the minority of UK-based holiday operator TUI Travel that it didn't already own.
In a joint statement, the companies said that taking into consideration TUI AG's existing stake in TUI Travel, the merger is expected to result in existing TUI Travel shareholders owning 46% of the combined group and existing TUI AG shareholders owning 54%, on a fully-diluted basis. TUI AG currently owns 51% of TUI Travel.
Under the merger, TUI Travel shareholders with receive 0.399 new TUI AG shares for each share they hold, and TUI Travel shareholders, including TUI AG, will also receive a second interim dividend.
"TUI Travel will, immediately prior to completion, declare and pay a second interim dividend of 20.5 pence per TUI Travel Share, to include 10.5 pence per TUI Travel Share in lieu of a final dividend for the financial year 2013/14," the companies said in a joint statement.
It said the merger is expected to be earnings per share accretive for both sets of shareholders from the first full financial year post-merger.
The companies said Alexey Mordashov, TUI AG's largest shareholder, has confirmed his support for the merger.
TUI Travel shares were trading 1.9% higher Monday morning at 366.95 pence, one of the best-performing stocks on the FTSE 100.
The planned merger ends years of speculation that TUI AG would eventually take full control of its UK travel unit.
For TUI, the deal will bring together the travel business with its existing hotels and resorts business and its cruises joint venture with Royal Caribbean Cruises Ltd. TUI AG also has a leftover stake in container shipping business Hapag-Lloyd, but wants to sell it, having sold a majority stake in 2009.
Earlier this year Hapag-Lloyd and CSAV agree to merge and create the world's fourth-largest container shipping company.
"There is a merger progressing between Hapag-Lloyd and Chilean company CSAV. We hope to dispose of the stake no later than Spring 2016," TUI Travel Chief Executive Peter Long told journalists Monday.
Long said the merger will "strengthen and future-proof" the business, accelerating growth, adding to its offering of exclusive holidays, and tens of millions in potential costs savings, including at least EUR45 million per year, largely because there will be no duplication of head offices.
"There will be some reductions in staff, but we do not believe the numbers will be large, as we will look for colleagues to join other parts of the business.
Long said that out of the 74,000 employees of the combined business, there will be around 1% or 2% in staff reductions, mostly from head offices.
The companies said in June that the merged entity will have two chief executive officers - both TUI Travel's Long and TUI AG's Friedrich Joussen - up until February 2016, after which Long will become chairman of the supervisory board, and Joussen would lead solely as CEO.
The combined company will be headquartered in Germany, but will be listed on the London Stock Exchange, where TUI Travel is already a FTSE 100 constituent, in parallel with a German listing.
"By simplifying the structure and combining the two businesses substantial synergies and cost savings will be realised. In addition, the potential to deliver material commercial benefits will be unlocked," said TUI Travel Deputy Chairman Michael Hodgkinson in the joint statement Monday.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
TUI.L