Tui AG poised to buy slice of Tui Travel

Tui AG poised to buy slice of Tui Travel

Tui Travel parent Tui AG is considering buying part of the Tui Travel business, according to sources within the company.

Business news agencies Bloomberg and Reuters reported Tui AG could purchase Tui Travel’s Central European unit which includes Germany, Europe’s biggest travel market. Central Europe accounted for about one-third of Tui Travel sales last year.

Tui AG was due to publish its latest quarterly results this morning. The company has been reported as keen to increase its 56% stake in Tui Travel, the group it set up in 2007, for more than year. But it lacks the funds for a full takeover.

The latest reports followed a note by analyst Morgan Stanley after Tui Travel’s third quarter results were issued last week.

This said: “The structure between Tui AG and Tui Travel looks unsustainable and a change appears increasingly likely.”

Bloomberg and Reuters attributed the story to unnamed sources, reporting a full takeover of Tui Travel has not been ruled out.

However, Morgan Stanley noted this would require a refinancing of Tui AG in a “completely unfavourable” market.

At present, Tui AG - listed in Frankfurt - is valued at about half as much as Tui Travel, which is listed in London.

A Tui AG spokesman said: “It has been known for some time that we are considering several options.” He said no decision had been made.

Buying Tui Travel piecemeal would be one way for Tui AG to increase its holding and give Tui Travel scope to invest elsewhere. However, a large part of Tui Travel’s strength has derived from being the leading player in more than one major market.

Any deal would hinge on support from Tui AG’s leading shareholders, Russian billionaire Alexey Mordashov and Norwegian billionaire John Frediksen, and be unlikely to happen before new chief executive Friedrich Joussen joins the Tui AG board in October.

Joussen, currently head of Vodafone Germany, will take over from Tui AG chief executive and Tui Travel chairman Michael Frenzel next year.


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