German tourism and shipping company TUI AG has announced that it will acquire U.K. based First Choice Holidays PLC, to form a European travel giant. The firm further reported that the new company, TUI Travel PLC, will have annual revenue of £12.1 billion, or about $23.49 billion. The company has been planned to be based in London and listed on the London Stock Exchange. The deal is the second crucial travel-sector deal in Europe this year. Last month Thomas Cook AG, a unit of KarstadtQuelle AG of Germany, hade announced that it would merge with U.K.-based MyTravel Group PLC.
However, there are fears that TUI’s effort to create a global giant could be blocked by the competition regulators. The recent announcement of takeover has provoked competition experts to question whether the second deal could destroy the first. As a matter of fact, if both deals are taken into consideration, the UK market will be left with just two major tour operators down from four.
Competition experts have said that acquisition plans by Europe’s leading tour operators are evidently to come under strenuous scrutiny by the European Commission in the wake of merger plans of TUI and First Choice. The Commission reserves the power to prevent giant cross-border mergers or demand asset disposals in return for approving tie-ups.
Germany-based TUI is planning to merge its tourism unit, excluding hotels with England-based First Choice, whose market value has been projected around 1.6 billion pounds (approximately $3 billion). Under the arrangements of the deal TUI will own 51 percent of the new firm.
