TUI AG (TUI1) retreated from a plan to combine with TUI Travel Plc (TT/), a week after the two travel companies said they’re in preliminary talks to merge, saying a share-based deal would not be in TUI shareholders’ interest.
“TUI AG will continue fully to exercise its role as majority shareholder in order to leverage the value potential and benefits within the TUI Group for the benefit of all shareholders and other stakeholders of TUI AG,” the company said today in a statement announcing its withdrawal.
TUI had a month to formally lay out its intentions with TUI Travel, after saying on Jan. 16 that the companies were at the “very early stage” of what they termed a “nil premium all- share merger. TUI has been under pressure from shareholders including Russian billionaire Alexey Mordashov and shipping magnate John Fredriksen to overhaul its structure.
TUI owns about 55.47 percent of TUI Travel’s outstanding shares, and the stake is valued at more than all of TUI’s market capitalization. Combining with TUI Travel would have given the German company access to the U.K. company’s cash flow and help eliminate costs from dual administrations and listings.
TUI said today that it’s decision to withdraw is ‘‘based on the assessment that a share-based transaction at current exchange ratios is not in the interest of TUI shareholders.” The companies had not specified a merger ratio when they first said they’re exploring a combination.
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