British and German travel groups agree merger terms

TUI AG and TUI Travel plc lifted the benefits they aim to reap from their planned all-share merger after the boards of both tour operator recommended its shareholders to accept the offer.

TUI Travel plc operates in Ireland through Falcon Holidays.

The combined entity, valued at about €6.5 billion, will realise €100 million from the combination via tax savings and benefits from eliminating overlapping functions and separate stock exchange listings, compared with €80 million projected previously, TUI Travel said in a statement today.

The deal would remove the biggest obstacle in TUI AG's corporate structure 1 1/2 years after Friedrich Joussen took over as chief executive officer. Joussen, who restored the company's ability to pay a dividend after investors came away empty-handed for years, plans to create the world's largest tourism business and run it together with TUI Travel CEO Peter Long until taking the sole helm from 2016.

"Significant operational and financial benefits are expected by the vertical integration which enables further efficiency gains and growth owing to a new group structure," TUI AG Supervisory Board Chairman Klaus Mangold said in the statement.

Bloomberg