Fredriksen increases TUI AG stake, sell TUI Travel shares

FRANKFURT Thu Nov 21, 2013 4:25pm EST

People pass the logo of German travel company TUI AG at the company's headquarters in Hanover, February 13, 2013. REUTERS/Fabian Bimmer

People pass the logo of German travel company TUI AG at the company's headquarters in Hanover, February 13, 2013.

Credit: Reuters/Fabian Bimmer

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FRANKFURT (Reuters) - Norwegian shipping magnate John Fredriksen is increasing his shareholding in Europe's largest tour operator TUI AG (TUIGn.DE) to more than 20 percent and simultaneously selling his entire stake in its TUI Travel (TT.L) subsidiary.

Fredriksen's aide Tor Olav Troim said that not only had Fredriksen made money with the deal on Thursday, he had strengthened his influence in TUI AG should he decide to renew efforts to merge the two companies.

"By increasing our stake in TUI AG we are strengthening our hand in the discussions about the future strategy," Troim said.

"Our goal is to create an integrated tourism group. A merger of TUI AG and TUI Travel Plc is an option", he told Reuters.

Fredriksen and Russian tycoon Alexey Mordashov, who owns 25 percent in TUI AG, had earlier this year discussed a possible nil-premium, all-share merger of TUI AG with its majority-owned unit TUI Travel to cut costs and strengthen its focus on tourism.

The two shareholders at the time discussed a tie-up via a so-called "reverse takeover" of TUI AG by TUI Travel, but TUI AG decided against an offer for the rest of TUI Travel, saying it was not attractive at current share prices.

While Fredriksen in the past tried to reach his goals at TUI AG without seeking consent of other shareholders and management, his aide said he is now on a peaceful mission.

"Unlike in the past, we have a very good dialogue with shareholder Mordashov. We also have strong faith in the executive and supervisory boards of TUI AG and TUI Travel Plc", he said, adding the current managers had done a good job in developing the companies

"We want to have good discussions in a constructive atmosphere. We have an open agenda," Troim said.

By contrast, in 2008 and 2009, Fredriksen had unsuccessfully tried to oust TUI AG's chairman and called for a replacement of Michael Frenzel as CEO, who resigned earlier this year after 19 years at the helm of the company.

While Fredriksen in the past also often complained that he had little say in TUI AG despite his 15 percent stake, Troim said he now has no particular demands.

"We are not necessarily asking for a seat on the board of TUI AG," Troim said.

Fredriksen's 5.4 percent stake in TUI Travel was sold at 366 pence a share, valuing the stake at around 220 million pounds ($355 million), the bookrunner said. TUI Travel's London listed shares closed at 389.3 pence on Thursday.

"TUI AG shares were trading to a clear discount to TUI Travel Plc shares. We took advantage of that", Troim said, adding Fredriksen made $150 million on the investment.

Fredriksen's aide declined to say if further purchases in TUI AG shares are planned.

"Our normal attitude is that we will not announce in advance whether we will purchase additional TUI AG shares", he said.

(Reporting by Kylie MacLellan; Editing by Anjuli Davies and Anthony Barker)

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