Germany’s multinational travel and tourism company TUI AG (ETR: TUI1) (LSE: TUI) said that following completion of a strategic review, it plans to dispose its Specialist Group, a profitable portfolio of specialist travel brands.
Specialist Holidays Group (SHG) is a wholly owned subsidiary of TUI Group. A truly global collection of niche holiday companies, SHG operates out of 23 source markets, selling around 750,000 holidays a year. With nearly 4,000 employees, its main headquarters are based in Crawley and Surbiton in the UK, along with Dublin in Ireland, Aarhus in Denmark, Clearwater in Florida and Castelnaudary in France.
Ahead of disposal, TUI’s Crystal and Thomson Lakes & Mountains will be transferred from Specialist into its UK Source Market, “due to the synergies between these businesses,” the company stated. Marketing of the remaining Specialist Group is expected to commence in the fall of 2016.
The move comes two weeks after TUI reached an agreement to sell Hotelbeds to GNVA Acquisitions Limited, a company ultimately owned by funds managed or advised by UK private equity firm Cinven and Canada Pension Plan Investment Board, for €1.191 billion in cash.
“We are focused on delivering our TUI Group strategy in becoming a content-centric, vertically integrated tourism business. The agreement to dispose Hotelbeds Group for €1.2 billion announced on 28 April 2016 and confirmation today of our intention to dispose Specialist Group enables us to focus fully on our growth strategy and to strengthen our balance sheet,” said TUI Group CEO Friedrich Joussen.
Hotelbeds was previously part of the Group’s Specialist Travel division and comprises B2B hotel portals selling globally sourced accommodation online to wholesale customers such as travel agencies and tour operators.
Hotelbeds is the global number 1 in the B2B accommodation wholesale space with operations in more than 120 source markets. Due to their different business models and strategies, Hotelbeds had been operated independently from the Group’s Tourism business in order to maximize the division’s growth and value.
In the year ended 30 September 2015 Hotelbeds generated a total transaction value of €3,657 million, a turnover of €1,059 million, underlying EBITA of €69 million and gross assets at signing amount to €1,338 million.
Proceeds will be used to invest in future growth opportunities and strengthen TUI’s balance sheet.
The Hotelbeds deal is subject to customary closing conditions and certain regulatory approvals and is expected to close by the end of September 2016.
BofA Merrill Lynch and Deutsche Bank are acting as financial advisors and Allen & Overy as legal advisor to the company.
SHG‘s two key market segments to be divested are the Sailing & Boating Holidays, and Tailormade Holidays.
SHG Sailing & Boating Holidays
The segment’s Moorings and Sunsail form the world’s leading yacht charter business. SHG has approx 1,000 yachts under our control based around the world. They are available for “bareboat” charter, skippered/crewed charter or for charter as part of a flotilla. Le Boat is the largest operator of self-drive boats on the iconic rivers and canals in Europe.
SHG Tailormade Holidays
The segment comprises Hayes & Jarvis, Sovereign Holidays, Citalia, Austravel (UK source market), American Holidays(Ireland source market) and MyPlanet/MarcoPolo (Denmark & Sweden source market). These businesses have a long history and expertise in putting together bespoke itineraries operated with scheduled flights.
The TUI Group, formerly Preussag AG, is the world’s leading tourism group, operating in around 180 destinations across the globe. The Group provides services along the entire tourism value chain for its 30 million customers. The company was founded in 1923.
It embraces global leaders in the tour operator business, 1,800 travel shops and top online portals in Europe, five tour operator-airlines flying more than 140 state-of-the-art medium- and long-haul aircraft, over 300 hotels in its own portfolio under premium brands such as Riu and Robinson, and a cruise fleet of 13 ships.
In the financial year 2014/15, the TUI Group with its 76,000 employees, generated a turnover of €20 billion. Global responsibility for sustainable economic, environmental and social activity is the core of its corporate culture. TUI is jointly listed on the Frankfurt Stock Exchange and the London Stock Exchange as a constituent of the FTSE 100 Index.
Having for more than 70 years been an industrial business operating as Preussag AG the company known today as TUI AG entered the tourism market in 1997 with the acquisition of one of Germany’s leading tourism companies Hapag-Lloyd. Further tourism acquisitions followed and the company started to exit from its industrial businesses. Acquiring some of the biggest names in European tourism including, Thomson, Fritidsresor and Nouvelles Frontières and shareholdings in the hotel groups RIU and Magic Life TUI AG created one of the world’s leading tourism groups.
TUI AG and TUI Travel have market leading tourism, hotel and cruise brands with a rich heritage of over 40 years in this industry. TUI AG and TUI Travel PLC have cooperated closely together since TUI Travel was created in 2007 and TUI Group is the natural progression where two TUI’s become one.
In 2007 the tour operating businesses of TUI AG, merged with the UK listed First Choice Holidays PLC, a tour operating business started in 1973 which had both Mainstream and Specialist businesses to form TUI Travel PLC, listed on the London Stock Exchange. The company’s major shareholder with a stake of 54 per cent was TUI AG.