Stock Exchange Announcement
The Boards of First Choice Holidays PLC ("First Choice") and TUI AG ("TUI") are pleased to announce the creation of one of the world's leading travel groups, TUI Travel PLC
TUI Travel PLC is being created through a recommended merger of First Choice and the Tourism division of TUI, excluding certain hotel assets ("TUI Travel")
The new group will have approximately 27 million customers in 20 source markets. It will be headquartered in the UK and application will be made for TUI Travel PLC's shares to be admitted to listing on the Official List and to trading on the London Stock Exchange
TUI Travel PLC will have proforma revenues of £12.1 billion (€17.6 billion), EBITDA of £554 million (€809 million) and EBITA of £325 million (€475 million)
First Choice and TUI believe that the Merger will deliver pre-tax cost benefits of at least £100 million (€146 million) per annum to be fully realised within three years of completion. The cost synergies are prior to any benefits expected from the existing TUI Travel restructuring programme
TUI Travel PLC will be chaired by Dr. Michael Frenzel (Chief Executive Officer of TUI), deputy chaired by Sir Mike Hodgkinson (Chairman of First Choice) and managed by Chief Executive Officer Peter Long (Chief Executive of First Choice), Deputy CEO Peter Rothwell (CEO TUI Northern Europe) and Chief Financial Officer Paul Bowtell (Group Finance Director of First Choice)
The strong strategic fit of the businesses combined with a leading management team provides the opportunity to create one of the world’s most profitable travel groups by delivering sustainable revenue and long-term earnings growth while deriving cost advantage from leveraging both synergy opportunities and economies of scale to enhance margins
TUI Travel PLC will have extensive content, multiple distribution channels and the cost advantage to compete in a dynamic and rapidly changing travel market. TUI Travel PLC will also be able to provide customers with the flexibility and choice they demand.
TUI Travel PLC will be 51 per cent. owned by TUI and 49 per cent. owned by the existing shareholders of First Choice (calculated on a fully diluted basis)
TUI will also contribute €875 million (approximately £600 million) of net financial debt, including all pensions liabilities currently associated with TUI Travel, to the new group
The Merger will be effected through the acquisition by NewCo of both First Choice and TUI Travel (First Choice by means of a scheme of arrangement). It is expected that the Merger will be completed in the third quarter of 2007
The Merger is conditional, inter alia, upon the approval of First Choice Shareholders and approval by the relevant anti-trust authorities. The Board of First Choice and the Supervisory Board of TUI have approved the Merger. While TUI shareholder approval is not required, First Choice shareholder approval will be sought at the Court Meeting and an Extraordinary General Meeting to be convened in due course. The directors of First Choice unanimously intend to recommend to First Choice Shareholders that they vote in favour of the Merger, as they intend to do in relation to their own shareholdings.