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TUI Resolves to Sell Hapag-Lloyd Stake to Albert Ballin

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TUI AG, the German owner of Europe’s largest travel company, said its executive board resolved to sell most of its stake in the Hapag-Lloyd AG container-shipping business to majority owner Albert Ballin.

TUI will tender a 33.3 percent holding in Hapag-Lloyd to the Hamburg-based group, to which it sold a majority stake in the container-shipping company in March 2009. The travel company still owns 38.4 percent and will use a contractually agreed exit right that must be exercised by Jan. 2, TUI said in a statement.

“Our exit from container shipping was set down more than three years ago with all partners in the Hamburg-based consortium,” TUI Chief Executive Officer Michael Frenzel said in today’s statement. “In the current year, we have already reduced our invested capital by 1 billion euros ($1.3 billion). Exercising our tender right is now the next consistent step.”

With an exit from shipping, TUI will be better suited to optimize its tourism business with expansion in Russia as well as China and India, Chief Financial Officer Horst Baier said in an interview in November. TUI owns a controlling stake in the U.K.’s TUI Travel Plc, shares of which rose in London on speculation that TUI may seek to buy out the remaining stake.

TUI shares jumped as much as 6.4 percent in Frankfurt and were up 6 percent at 4.02 euros as of 2:30 p.m. TUI Travel, Europe’s largest travel company, rose as much as 3.8 percent to 158 pence in London.

Exit Strategy

“Investors might be speculating that TUI will buy shares of TUI Travel and might react positively to the fact that it’s part of the strategy to focus on tourism, but the exit is not really a surprise,” said Jochen Rothenbacher, an analyst at Equinet AG in Frankfurt who recommends buying TUI shares. “This option was part of the exit strategy and it was almost 100 percent certain that management would exercise it.”

TUI said it will be entitled to sell “the majority” in Hapag-Lloyd to third-party investors should a sale contract with Albert Ballin not be drawn up by the end of September 2012.

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