TUI Looks at ‘Mini-IPO’ of Stake in Hapag Lloyd Division

TUI AG (TUI1) is considering the public listing of a small amount of shares in container shipper Hapag-Lloyd AG as a first step to exit its 22 percent stake, Chief Financial Officer Horst Baier said.

“Gathering a group of investors who would buy some shares and then speaking to the stock exchanges” might set the stage for the listing, TUI Chief Financial Officer Horst Baier said in an interview today in Hanover, Germany, where TUI is based.

Divesting the stake in Germany’s biggest container line is among the projects Chief Executive Officer Friedrich Joussen still has to tackle as TUI seeks to lift operating profit to 1 billion euros ($1.4 billion) by fiscal 2015. The company has eliminated half of the staff at its headquarters, sold the corporate jet and started cutting costs at the unprofitable cruise unit and subsidiaries in France and Russia.

Earnings will rise as much as 12 percent this year after climbing 2.2 percent to 761.9 million euros in fiscal 2013, TUI said today. The company swung to a profit in the year ended Sept. 30, while analyst had predicted a loss.

TUI yesterday announced a surprise dividend of 15 euro cents a share, the first cash payout in seven years. The stock rose as much as 4.8 percent today to the highest intraday price in five years.

Chilean Merger?

Hapag-Lloyd said on Dec. 5 it’s discussing a possible merger with Cia. Sud Americana de Vapores SA, Latin America’s biggest container shipping line, as the companies struggle to overcome a global trade slump that has left their industry in crisis. Baier said there was an industrial logic for the possible combination of the two companies, and he wasn’t worried that merger discussions would put off preparations for a listing.

Baier said no initial public offering will happen through the first quarter of 2014, and no banks had been mandated to help with such a transaction yet. While Germany’s benchmark index DAX has reached records this month, the rally isn’t pressuring TUI to find a quick solution, he said.

Combining Hapag-Lloyd with CSAV would create the world’s fourth biggest container liner in terms of capacity, and the discussions come after talks to merge with local competitor Hamburg Sued failed in March. Hapag-Lloyd owners include insurer Signal Iduna Group, billionaire Klaus-Michael Kuehne, HSH Nordbank AG and the city of Hamburg.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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