TUI, First Choice Merge Travel Businesses

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 TUI’s tourism division. TUI AG will hold 51 percent and First Choice shareholders will end up with 49 percent. 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.