TUI Travel share price drops on TUI AG announcement

On Thursday, the German firm TUI AG revealed that it did not intend to buy out the other shareholders in its UK tour operator TUI Travel, an announcement which led to a sharp drop in the price of the British company’s shares.

TUI Travel, in which 51 per cent of the shares are owned by TUI AG, saw shares fall by 24.1 percent to 189.6 pence in trading on Thursday morning, after having gained 17.8 per cent over the previous five days.

Shares in TUI Travel shares had increased by more than 25 per cent on Monday after TUI AG announced that it was selling Hapag-Lloyd, its container shipping division, to a Hamburg-based investment consortium at a price 4.45 billion euros.

The deal leaves TUI AG with one-third of the shares of Hapag-Lloyd, and will provide the company with cash proceeds of 2 billion euros, which it will need to use for the repayment of debt or reinvestment in the company according to the terms of its bond covenants, a spokesman for the company said.

One possible use of the proceeds from the Hapag-Lloyd sale was an expansion of its investment in its travel business, such as buying out other shareholders in TUI Travel.

www.tuitravelplc.com