TUI Shares Fall After Tycoon Sells Out

February 20, 2014

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Shares in German travel group TUI dropped 5 percent on Thursday following the sale of a 15.7 percent stake by its second-largest shareholder, John Fredriksen, who had been pushing for a merger with London-listed TUI Travel.

The Norwegian-born shipping magnate sold 39.7 million ordinary shares via his Monteray investment vehicle in a market placing at euro;13.13 a share for a total of EUR€521 million (USD$717 million).

Having clashed with TUI's previous chief executive Michael Frenzel, Fredriksen last year instigated talks with the aim of merging TUI with 54.5 percent-owned TUI Travel, Europe's largest tour operator.

His aide told Reuters news agency that Fredriksen found he had too little influence at the group.

"Our investment in TUI was not the best investment we've done in the past. But with the share price recovery since Frenzel's departure we were now able to recover most of our money," Tor Olav Troim said. He declined to give a date for the planned sale of Fredriksen's remaining 4.4 percent.

TUI said it believed the move was consistent with Fredriksen's strategy of focusing on shipping over tourism, especially after Monteray also reduced its stake in TUI Travel in November.

Troim said Fredriksen had rejected a suggestion by TUI that he buy the group's 22 percent stake in shipper Hapag-Lloyd, in talks over a merger with Chilean shipper Vapores, also because he would have had too little say there.

Meanwhile TUI shareholder RIU, the Spanish hotels group, and three of TUI's senior executives have increased their shareholdings in the company by buying some of Fredriksen's shares in the placing. RIU has raised its stake to around 8 percent from 6 percent, according to a document sent to employees by TUI management.

It was not clear if TUI's biggest shareholder, Russian billionaire Alexei Mordashov, has also increased his stake, which currently stands at 25.22 percent according to Thomson Reuters data.

TUI's chief executive Friedrich Joussen bought shares worth EUR€500,000 in the placing, while chief financial officer Horst Baier and chairman Klaus Mangold bought EUR€250,000 worth apiece.

"We consider the new shareholder structure... and the future high liquidity in the market as an opportunity for the further positive development of TUI and our group," Joussen said in the letter.

The sale was made via an accelerated book-building process managed by Goldman Sachs.