Tui Travel marriage bids 'auf wiedersehen' to UK base

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The Independent Online

One of the City's longest courtships looks finally to be ending in marriage with Tui Travel set to merge with its majority shareholder, Germany's Tui AG.

Speculation the two would formally join forces has been ongoing almost since the creation of Tui Travel through the merger of First Choice Holidays with Tui's tourism business in 2007. They nearly came together in 2013 only for Tui Travel to walk away.

Putting together the agency with Tui's portfolio of resorts, cruise ships and hotels would create what the two called the world's largest "integrated travel company".

The tie-up, however, may not be popular with everyone as it will be accomplished through a nil-premium merger rather than via Tui paying a premium to buy out the minority shareholders in a business it owns 55 per cent of.

Tui Travel shareholders will receive 0.399 new Tui AG shares for each share that they own. Its chief executive Peter Long will be co-chief executive of the merged group along with his Tui AG counterpart Fritz Joussen until 2016, when he will become chairman of the group's supervisory board. At that time, Mr Joussen will take on full responsibility for running the business.

Crucially, in an apparent attempt to sell the deal to the independent UK investors who have to approve it, the company will be jointly listed on both the London and Frankfurt stock exchanges, although it will be a German domiciled company.

Beyond that, however, Mr Long was notably light on specifics other than promising cost savings of €45m (£26m) through the elimination of duplication, including the fact that the merged business will have just one head office in Germany. No details were given on possible job losses.

Mr Green also said the combination would be able to access certain tax losses which have remain locked within the German business

In their announcement, the companies said it was their intention to "adhere to both the UK Corporate Governance Code and the German Corporate Governance Code to the extent practicable".

The group also intends to be subject to the shared jurisdiction of the UK Takeover Code and German takeover law, although it will have a German style supervisory board above a management board, rather than the unitary board favoured in the UK.

Mr Green said: "We will work through in terms of ensuring we fulfil all of our [governance] requirements. There are certain requirements to being a FTSE 100 company and we will work through towards satisfying all requirements. I have experience in both environments."

Mr Green said what had changed between now and last year was the "relationship" established between himself and Mr Joussen. He talked of their "shared vision" and made much of his "excitement" about "the journey we are on".

The merger has the backing of Alexey Mordashov, the largest shareholder in Tui AG who has previously pushed for a tie-up between the two.

Shares in Tui Travel rose more than 3 per cent to 403.5p.