Billionaire Fredriksen Cuts TUI Stake as Cargo Ties Wane

John Fredriksen, the second-biggest investor in travel operator TUI AG, cut his stake as the German company shifts away from the shipping industry that’s the focus of the Norwegian billionaire’s assets.

Monteray Enterprises Ltd. sold 39.7 million TUI shares, or 15.7 percent of the stock, at 13.13 euros apiece, leaving the Fredriksen family-controlled holding company with 4.4 percent, sale manager Goldman Sachs Group Inc. said today in a statement. That amounts to about 521.3 million euros ($714 million). TUI management and RIU Group will buy some shares, pushing the stake held by the Spanish hotel partner to 8 percent from 6 percent, the Hanover-based company said today.

Chief Executive Officer Friedrich Joussen is tightening his grip on TUI by pledging to turn around unprofitable operations and improving capital efficiency with the sale of hotels. He’s also renewing a bid to dispose of a holding in container-shipping line Hapag-Lloyd AG. TUI stock has risen 59 percent in the past 12 months. Fredriksen, whose investments span oil tankers and fish farms, has owned a stake since 2007.

Fredriksen is taking advantage of the share price gain to make the “surprise” disposal because “his initial rationale to invest in TUI, the undervalued shipping activities, is not valid any more,” Jochen Rothenbacher, an analyst at Equinet Bank in Frankfurt, said in a note to clients.

Stock Falls

TUI fell 5.4 percent to 13.02 euros at the close in Frankfurt in the steepest drop since Aug. 27, valuing the company at 3.29 billion euros.

Fredriksen reorganized holdings in November when he sold his stake in the German company’s TUI Travel Plc unit, Europe’s biggest tour operator, to add to his ownership of TUI AG. Since then, TUI’s price has jumped 33 percent.

After taking an initial holding in 2007, the billionaire pushed the company to split shipping operations from the tourism business. TUI, which considered an initial public offering for Hapag-Lloyd in 2011, now holds a 22 percent stake in the Hamburg-based business and said in December that an IPO of part of its remaining holding is still possible as a step to exit.

Hapag-Lloyd and Chilean competitor Cia. Sud Americana de Vapores SA agreed last month to combine operations to form the world’s fourth-largest container-shipping company.

“The decision taken by Monteray is a consistent continuation of its strategy to focus on its core business,” TUI Supervisory Board Chairman Klaus Mangold said in the German company’s statement. Mangold will buy some TUI stock alongside Joussen and Chief Financial Officer Horst Baier.

The transaction means TUI’s two largest shareholders, second-ranked RIU and Russian billionaire Alexey Mordashov, who controls about 25 percent of the shares, both have a strategic interest in the company. The Spanish company and TUI jointly own RIU-brand hotels. Mordashov’s S-Group Capital Management Ltd. has a joint venture with TUI that runs tour operators in Russia and the Ukraine.

The transactions increase the proportion of freely traded shares to almost 66 percent from about 48 percent, TUI said.

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