* TUI Travel says talks on all-share, nil-premium merger
* TUI AG has until Feb. 13 to make firm proposal
* TUI AG focusing on tourism, deal could make savings
* TUI AG shares up over 9 pct, TUI Travel up 4 pct (Recasts with statement from TUI Travel)
By Arno Schuetze
FRANKFURT, Jan 16 German travel and shipping group TUI AG has proposed a nil-premium, all-share merger with its majority-owned UK business TUI Travel to cut costs and strengthen its focus on tourism.
Three sources close to the matter told Reuters earlier on Wednesday that talks were underway and TUI AG's main shareholders were interested in a reverse takeover by TUI Travel which might offer a premium to TUI AG's current share price.
However the UK-listed firm, 56.4 percent owned by TUI AG, said in a statement any deal would be an all-stock merger under which neither set of shareholders would get a premium.
TUI Travel, Europe's largest tour operator which was formed in 2007 after the merger of TUI AG's travel business and Britain's First Choice, said talks were at an early stage and that its statement was made without the consent of TUI AG.
It added that under UK takeover rules, TUI AG must make a firm proposal by the close of business on Feb. 13 or walk away.
TUI AG was not immediately available for comment.
While TUI Travel comprises the whole tour operating business of the travel group, TUI AG also has hotels and luxury cruise operations as well as a stake in container shipper Hapag-Lloyd.
Ever since TUI AG decided in 2008 to shift its focus away from shipping and sell a majority stake in Hapag-Lloyd , its shareholders have been considering ideas of how to combine with TUI Travel to cut costs and pool resources, such as hotels, the sources told Reuters.
"The idea is to bring two companies that operate in same industry together. It is a story of synergies," one said.
Both groups currently have their own headquarters - in Hanover, Germany, and London respectively - and a merger could potentially yield over 500 million euros ($667 million) in savings, two sources said.
Analysts, however, have calculated a much lower number closer to 100 million euros.
At 1600 GMT, TUI AG shares were up 9.1 percent at 8.075 euros. That compares with as much as 18 euros in 2008, before a global economic slowdown hit tourism and particularly shipping. TUI Travel's shares were up 3.8 percent at 291.8 pence.
The sources said TUI AG's biggest shareholders, Russian tycoon Alexey Mordashov with 25 percent and Norwegian shipping magnate John Fredriksen on 15 percent, were particularly keen on a tie-up with TUI Travel.
Both have lost millions on their investments in TUI AG, after building their stakes in 2008 and 2009 at a premium to today's share price. Fredriksen is also TUI Travel's second-biggest shareholder with a 5.4 percent stake.
However, while some other shareholders have signalled support, many people at TUI AG oppose such a plan, fearing the German operations would be sidelined, the sources said.
It was not feasible for TUI AG to buy the 43.6 percent of TUI Travel it does not own because it lacks the funds and has little prospect of raising money on equity markets, given it trades at a hefty discount to peers, one of the sources said.
The sources said obstacles to a potential tie up included what to do with carried-forward losses from TUI AG and legacy issues from its days as mining conglomerate Preussag.
Separately, other sources said TUI Travel was in talks with Airbus and Boeing about a plane order worth $6 billion at list prices to renew its fleet over the next decade.