Saturday, November 19, 2011

TUI to sell remaining interest in Hapag-Lloyd

Back when TUI did the deal with a group of investors to buy part of Hapag-Lloyd,
part of the deal was an option for Albert Ballin (the investor group), to
buy the remaining interest of TUI in Jan. 2012.

Albert Ballin probably has second thoughts about this.

I don't know the terms, but guess they will probably have to buy the rest
of the shares at the previously agreed price.

From Bloomberg News

TUI AG (TUI1) plans to sell its remaining stake in the Hapag-Lloyd AG container-shipping business in January and expand further in Russia and China as the German tour operator redefines its business model.

“We looked for ways to exit Hapag-Lloyd such as finding a new investor or doing an initial public offering, but without having the chance to succeed we’re back to our right to tender our stake,” Chief Financial Officer Horst Baier said yesterday in an interview in Frankfurt. “Assuming we get all the approvals, we’ll execute our option on Jan. 2.”

TUI sold a majority stake in Hapag-Lloyd, Germany’s biggest container line, to Hamburg-based investment group Albert Ballin GmbH in March 2009. The travel company still owns 38.4 percent and has the option to sell a stake to Ballin on Jan. 2.

With an exit from shipping, Hannover-based TUI will be better suited to optimize its tourism business with expansion in Russia as well as China and India, the CFO said. In China, TUI plans to boost its trade in sending tourists to Europe.

“We are currently No. 5 in Russia and plan on becoming No. 2 in the next two-to-three years,” Baier said. “In Asia, we are at the very beginning of our journey, but plan to expand in China and India.”

Baier said the company is “pushing” online offerings and already has about 70 percent of destinations online in Scandinavia, while the percentage is “weaker” in Germany. The company also wants to expand market share in the German-speaking market for cruises, the CFO said.

“It’s frustrating to see how Europe’s debt crisis has affected the real economy and investor sentiment, however we had other years where we had some insecurity and where things cooled down,” Baier said. “We should wait a little bit more to see the outcome of the crisis.”

TUI is scheduled to report yearly earnings on Dec. 14.

The shares dropped 3 percent to 3.89 euros at the close of trading in Frankfurt today, the lowest since Oct. 5. They have fallen 63 percent this year.

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