A Balearic-led consortium yesterday closed the biggest business deal in the history of the Balearics and the Spanish tourist industry by purchasing a 17.3 percent stake in Germany's world leading tour operator TUI, which owns Thomson Holidays, for almost one billion euros to become the leading shareholder in the travel group.
Majorcan hotel chain Riu, Spanish savings bank Caja de Ahorros del Mediterraneo (CAM), which has a five percent stake in the Majorcan hotel chain Sol Melia, and the Ibizan hotel group Grupo de Empresas Matutes together bought the major part of German state bank WestLB's 31.3 percent total TUI stake.
The deal is the biggest in the history of the Spanish tourist industry and one of the largest ever in Spain and makes the Balearics one of the big players in the world tourist industry while also serving to secure jobs and the tour operator's commitment to the region.
The Riu family will own about 10 percent of TUI after the deal, becoming TUI's biggest shareholder, and said the move would strengthen its relationship with the company. CAM said it paid 155 million euros for a 4.9 percent holding in TUI.
About 40 percent of TUI's business comes from customers travelling to Spain, and TUI already owns 50 percent of Riu's Riusa II and 49 percent of its Riu Hoteles SA hotel businesses.
Riu's stake in TUI will be held by the family and not by the joint companies, Riu said, adding that the move was a long-term commitment and that Riu does not plan to sell the TUI shares. Riu is interested in taking a more active part in the further development and strengthening of the company, Carmen Riu, joint owner and joint chief executive of Riu, said yesterday.
TUI, Europe's largest tourism group, had always wanted the Riu family, with which it already had links, to become its key shareholder to avoid a takeover or break-up when WestLB, which is looking to reduce its industrial holdings, sold its stake.
WestLB's remaining 14 percent holding in TUI was sold by Deutsche Bank mainly to institutional investors in Europe for 16.5 euros a share yesterday, a Deutsche Bank investment banker said. It's a good solution, not the best, but a good solution. Now people are looking much more at fundamentals, said Union Investment fund manager Michael Gierse, whose funds own TUI stock. TUI's underlying performance is great, he added.
TUI Spain last year turned over 12 million euros and has seen tourism grow by three percent in the Balearics this year.
So far this year, the tour operator has brought 2.4 million, well up on last year's 1.712.000, holidaymakers to the Balearics and 6.7 million to Spain in general.
Worldwide however, TUI has carried over 18 million passengers and the German group's travel operations account for 12.7 percent of its parent company TUI AG's annual turnover of 19.200 million euros.
TUI chief Michael Frenzel said yesterday the sale to the Spanish group was an excellent result. This solution takes the uncertainty out of the markets, the company can concentrate entirely on the operating business again, he said.
Jan Kahmann, deputy chairman of TUI's supervisory board, said he expected TUI's corporate structure to remain unchanged.
Speculation had mounted earlier this year that TUI, which owns Britain's Thomson, could be taken over and split up after its share price slumped amid concern about the tourism industry, threatening the company with an exit from the DAX blue-chip share index.
Holiday bookings have improved in recent months, and Frenzel reiterated yesterday that the positive trend seen in the third quarter would continue.
What happened today is very positive. Now these rumours are over, investors can focus again on the operating business. The recovery in tourism seems to be sustainable, said Martina Jung, an analyst at Metzler who rates TUI as buy.
The company structure is not in danger at all, she added.
Deutsche Bank sold the shares to the Spanish group and to other investors.
The Spaniards bought the shares at a premium to TUI's closing share price of 16.75 euros on Tuesday, Deutsche said yesterday and in future, part of the huge profits generated by the tour operator will only serve to benefit the Balearics.
What is more, the region's tourist industry can no longer claim to be the victim of bully tactics by the leading tour operators as the controlling shareholders in Europe's top tour firm are now Majorcan.