JUST a week after revealing they were in merger talks, Tui Travel and its German parent Tui AG have called off discussions, sending shares in the FTSE 100 company tumbling nearly five per cent.
Tui AG, which owns 56 per cent of Tui Travel, said the nil-premium merger on the table was not attractive based on the current share prices.
The holiday groups are now barred from rekindling talks for six months under Takeover Panel rules.
Tui AG’s major shareholders, including Russian billionaire Alexei Mordashov and Norwegian shipping magnate John Fredriksen, have been pushing the companies to save on costs by sharing resources.
Sources close to the companies had talked up the value of synergies, but analysts were sceptical that the firms could squeeze the claimed €500m (£420.3m) savings out of two companies that already work closely together.
“With denial well ahead of the mid-February put-up-or-shut-up deadline… the no-deal announcement may suggest to the markets that Tui Travel shares are overvalued,” Accendo Markets head of research Mike van Dulken said in a note to clients.
Tui Travel’s shares closed at 278p, below the price they were before the merger talks were announced. Shares in German-listed Tui AG fell 5.4 per cent to €7.51.
Tui Travel was advised by Lazard during the talks.