Tui mulls listing move to Germany from UK; Sees 25% profit jump

Tui said it had been recently approached by certain shareholders over whether its current listing structure was “optimal and advantageous” and if an inclusion on Frankfurt’s MDAX would be beneficial.

“This is against the background, that in the period since the completion of the merger with Tui Travel and, more significantly in the past four years, the ownership of Tui AG’s shares and the liquidity on the exchanges has evolved significantly with a notable liquidity migration from UK to Germany,” the company said.

“In light of the views expressed by shareholders and any further feedback from shareholders, the executive board is currently considering, if an upgrade to a Prime Standard listing in Frankfurt with MDAX inclusion and a delisting from the London Stock Exchange would be in the best interest of shareholders.”

Tui said potential advantages of a move were “centralisation of liquidity, providing a clearer investment profile under a single listing, potential benefits to European Union airline ownership and control requirements, potentially enhancing TUI AG’s equity profile with an expected prominent position in the MDAX50 and creating efficiencies as well as reducing costs”.

Shareholders will be asked to vote on the issue at the company’s annual meeting on February 13. Under the UK listing rules, a delisting will require shareholder approval of at least a 75% majority of the votes cast.

PROFITS SURGE ON STRONG DEMAND

Tui posted underlying operating profit of €977m for the year to September 30, up €568m on revenue which came in at €20.7bn. The company forecast a 10% rise in sales this year.

"Our strategic initiatives to increase value and the current booking trend lead us to expect a further improvement in 2024," chief executive Sebastian Ebel said on Wednesday. However, the company cautioned that its guidance was set against the backdrop of "current macroeconomic and geopolitical uncertainties, particularly in the Middle East".

AJ Bell investment director Russ Mould said that, unlike some recent departures from the UK stock market, "Tui may not be massively missed".

Recent departures to hit London's reputation as a major financial centre include, building materials group CRH, which in March said it was moving its primary listing to the US, after the UK-based plumbing equipment supplier Ferguson (formerly known as Wolseley), which did the same last year.

Cambridge-based chip designer Arm also turned its back on the UK’s in favour of a huge floatation on the Nasdaq in New York.

“Partly thanks to the pandemic, its share performance has been turbulent to say the least and its operational track record has been far from flawless too. The company is on an upwards trajectory though – announcing an impressive increase in earnings as it demonstrated some pricing power and managed to trim its still onerous debt pile," Mould said.

“There is obvious logic to the move given Tui is very much a German business which even received a bailout from the country’s government during Covid. It will be interesting to see how investors vote in February – with the required 75% approval a high bar to clear."

Reporting by Frank Prenesti for Sharecast.com