TUI Travel to Buy Magic Life

TUI Travel to Buy Magic Life

Further to the announcement of TUI Travel PLC’s interim results on 10 May 2011 which stated that TUI Travel intended to acquire the operating companies that lease and manage the Magic Life clubs, TUI Travel is pleased to announce that it has reached agreement with TUI AG and its subsidiary undertaking, Magic Life GMBH & Co KG, for the Group to acquire six separate operating companies through which Magic Life leases and manages 13 holiday clubs in Turkey, Tunisia, Egypt, Greece and Spain.

This represents an important strategic step for the Group in securing the supply of an attractive, differentiated high quality hotel club product. The total consideration is €6 (€1 per operating company) in cash with the assumption of contingent debt of €10.5 million. Certain "Magic Life" trademarks and related rights are being acquired for a further €1 in cash.

The proposed acquisition is classified under the Listing Rules made by the UK Financial Services Authority as a "related party transaction" as TUI AG is classified as a "related party" as a substantial shareholder of TUI Travel. Consequently, the proposed acquisition is conditional upon and must be approved by TUI Travel's shareholders other than TUI AG and its affiliates before it is completed. Shareholder approval will be sought at a General Meeting expected to be held in the second half of June 2011.

Magic Life was founded in the early 1990s to provide an all–inclusive holiday product to the Austrian market. Magic Life is currently owned by TUI AG. Magic Life's business is well regarded as an important mid–range all–inclusive product, primarily for the German and Austrian source markets, and is an important part of the differentiated product offerings of the Group’s tour operators in these markets.

The business has recently generated an operating loss before taxation of €22.6 million (according to the ML Companies' latest statutory accounts for the year ended 30 September 2010) and has previously been highlighted by TUI AG as a non–core asset which may be subject to disposal. This reported loss, when adjusted for certain costs that will not form part of the acquired business (following the restructuring of Magic Life detailed below), is reduced to €10.3 million.