TUI/First Choice deal gets conditional OK

[Pieter C. 5]

TUI/First Choice Deal Gets Conditional OK

 

June 5, 2007

Germany's TUI won conditional permission from the European Commission on Monday for a tie-up of its tourism unit with First Choice, boosting its position as Europe's biggest travel firm.

 

"The Commission's decision is conditional upon the divestiture by TUI of its Irish business operating under the 'Budget Travel' brand," the EU executive said.

 

"In light of this commitment, the Commission has concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it."

 

The Commission had been concerned the two parties would control more than half the market for tour packages in Ireland.

 

The two companies said they expected the new firm to be called TUI Travel and to list its shares publicly by October 1.

 

The two companies serve as travel agents, and TUI runs a charter airline and rents hotel rooms. The companies also sell package holidays, ranging from weekend getaways to luxury packages.

 

The market has changed in the past few years, with a combination of the Internet and low-cost airlines taking away a chunk of the business, people close to the companies have said.

 

The two firms have said they plan to create TUI Travel, a London-based tourism giant 51 percent owned by TUI. First Choice shareholders would own 49 percent.

 

The deal follows the approval of a travel merger in May, when German-owned Thomas Cook won permission from the Commission to buy package holiday rival MyTravel.

 

(Reuters)