TUI AG and First Choice Holidays have
agreed to merge the tourism division of TUI AG, minus certain hotel
assets, with First Choice Holidays into a new leisure travel group
called TUI Travel.
The newly created
corporate entity TUI Travel will purchase First Choice and TUIs
tourism division. TUI AG will hold 51% and First Choice
shareholders will end up with 49%. The company will be
headquartered in the U.K.
Based on the 2006
revenue of the respective companies, the merged company is expected
to have $24 billion in annual revenue.
Within three years
the new company hopes to realize $194.1 million annually from
synergies, including the elimination of redundancies in areas such
as administration, IT infrastructure, back office functions,
scheduling, planning and marketing.
The company also
expects to gain what it calls "growth synergies" by marketing the
First Choice products in Central Europe, for example.
The parties expect
to complete the merger in the third quarter of 2007. Completion of
the deal will depend on the approval of relevant anti-trust
authorities and the shareholders of First Choice.
The new company
being created by the merger of First Choice Holidays and TUI
expects to have 27million customers in 20 source
markets.
To
contact reporter David Cogswell, send e-mail to [email protected].