Tui Travel and German parent Tui announce merger plan

Tui logo Image copyright Getty Images
Image caption The two companies had discussed a possible merger at the beginning of last year

German travel giant Tui and its UK subsidiary Tui Travel have announced plans to merge following years of speculation about such a deal.

The firms said a merger would deliver a number of benefits, including 45m euros (£36m; $61m) of cost savings a year.

Tui currently owns a 55% share in its UK subsidiary.

The share prices of both companies rose following the announcement, with Tui up 3.5% in Frankfurt and Tui Travel up 4% in London.

"The independent directors of TUI Travel and the executive board of TUI AG are pleased to announce that they have reached an agreement in principle on the key terms of a possible all-share, nil-premium merger of TUI Travel and TUI AG," a joint statement said.

Under the proposed terms of the deal, Tui Travel shareholders would receive 0.3999 new Tui shares for each Tui Travel share they own. The merged company would have its headquarters in Germany but would keep a listing on the London Stock Exchange.

Alexey Mordashov, the largest shareholder in Tui, has indicated he would support a merger deal. Any merger would be subject to UK and Germany regulatory approval.

The companies had discussed a merger at the beginning of last year but talks broke down without agreement.

Tui Travel owns a number of brands, including Thomson, Airtours Germany and

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