That is a bit oversimplifying.
Talk is mainly that there are different scenarios under evaluation and the most likely appears to be that TUI and Lufthansa will join forces in the long-haul sector, using the Germanwings brand name. Reason is that Lufthansa/Thomas Cook will loose Condor as their in-house carrier while TUI wants to revive long-haul ops that ceased a couple of years ago. Both have the problem that the do not want to become dependent on the Air Berlin group tat has acquired the two remaining long-haul carriers for IT flights, Condor and LTU.
From what I gather in the German press there is no talk of giving up separate short-haul ops under the respective brands in the short term.