the world’s number one integrated leisure tourism …...tui travel and tui ag disclaim any...

The world’s number one integrated leisure tourism business

- A simplified business

27 June 2014

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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD

CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

THIS DOCUMENT IS NOT PUBLISHED IN CONNECTION WITH AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE

CITY CODE ON TAKEOVERS AND MERGERS AND THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE OR AS TO THE TERMS OF ANY OFFER

This document is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire,

subscribe for, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction whether pursuant to this announcement or otherwise.

No shares are being offered to the public by means of this document.

The release, publication or distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are

subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. Any failure to comply

with applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the

companies and persons involved in the proposed merger of TUI Travel plc (“TUI Travel”) and TUI AG disclaim any responsibility or liability for the violation of such

requirements by any person.

This document contains statements about TUI Travel and TUI AG that are or may be forward looking statements. All statements other than statements of historical facts

included in this document may be forward looking statements. Such forward looking statements involve risks and uncertainties that could significantly affect expected

results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward looking

statements, as by their nature forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances

that will occur in the future. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as

of the date hereof. TUI Travel and TUI AG disclaim any obligation to update any forward looking or other statements contained herein, except as required by applicable law

or regulation.

Neither TUI AG nor TUI Travel, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the

occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. You are cautioned not to place undue reliance on

these forward-looking statements, which speak only as of the date hereof. Other than in accordance with its legal or regulatory obligations, neither TUI AG nor TUI Travel

is under any obligation and TUI AG and TUI Travel each expressly disclaim any intention or obligation to update or revise any forward-looking statements, whether as a

result of new information, future events or otherwise.

Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a

result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different

from those estimated.

No statement in this document is intended as a profit forecast or estimate for any period and no statement in this document should be interpreted to mean that earnings

or earnings per share for TUI Travel or TUI AG, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings

or earnings per share for TUI Travel or TUI AG, as appropriate.

Important Notice

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Agenda

Strategic Rationale

Key Merger Terms and Anticipated Timeline

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Creation of the world’s number one integrated leisure tourism business

Continuation of existing strong leadership

Significant synergies through combining the two businesses

Non-core businesses will be run separately and maximised for value

Accelerate the growth of the core Mainstream tourism business

Strategic Rationale - Overview

A pure play integrated leisure travel business

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Strategic Rationale

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Research

Book

Pre-trip

On holiday

Journey

After Holiday

Brand: Most recognised travel brand throughout Europe

Content: With > 230 hotels and > 155,000 beds Europe's largest leisure holiday hotelier 7 cruise ships*

Customer: Access to > 30 million customers worldwide

Tour operator brands: Leading portfolio of tour operator brands

Unique holidays: High demand for exclusive hotel content

Distribution platform: Leading online tour operator platforms and more than 1,800 travel agencies in Europe

Airline: Modern holiday airline fleet with > 140 aircraft

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Complementary strengths by combining the businesses

* Ship number comprises of 3 from TUI Cruises and 4 from Hapag-Lloyd Cruises Source: Company information

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Significant value creation

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Combination of two of the strongest

platforms in tourism

Combination of two ambitious and highly

promising growth plans

Strong mutual benefits in a combination

Leading tourism content

Accelerated growth of content

Market leading tour operator

Leveraging profitable top-line growth

Merger integration risks mitigated by existing strong links between the companies

Accelerated growth profile of the core Mainstream tourism business and significant synergies through combining the two businesses


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Simplify and focus on an

integrated tourism business

• Accelerate growth of exclusive hotel

and cruise content

• Broader unique holiday offering

• Accelerated investment in digital

platforms

Drives customer and top line

growth

• Leverage TUI brand

• Drive cost efficiency of combined

group

• Maximise value creation from non-

core businesses

• Focus cash utilisation on exclusive

content development and digital

platforms

A focused streamlined business accelerating growth

Strategic Agenda Operational Agenda

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Strategic Rationale

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Klaus Mangold

Chairman of the

Supervisory Board

Executive Board

Peter Long

Joint Chief

Executive

Friedrich Joussen

Joint Chief

Executive

Focus: Delivering synergies

& maximising value creation

of non-synergistic businesses

Focus: Delivering synergies

and future Mainstream

development

Johan

Lundgren

Deputy CEO –

Leading all

Mainstream

Markets

William

Waggott

CEO Online

Accommodation

and Specialist &

Activity

Horst Baier

CFO and

divestment of

Hapag-Lloyd

Container

Shipping

Sebastian Ebel

HR/Arbeitsdirektor

CEO Platforms

Peter Long

Chairman of the

Supervisory Board

Friedrich Joussen

Chief Executive

Proposed Structure to February 2016 Planned Structure thereafter

Executive Board

Johan

Lundgren

Deputy CEO –

Leading all

Mainstream

Markets

William

Waggott

CEO Online

Accommodation

and Specialist &

Activity

Horst Baier

CFO

Sebastian Ebel

HR/Arbeitsdirektor

CEO Platforms

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Strategic Rationale

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Corporate Streamlining

Tax

Commercial Benefits

Significant shareholder value creation

Year 1 Year 2 Year 3

Target Delivery

A cash tax benefit of €35m would have been achieved if the two businesses had been combined in FY13

At least €45m per annum by Year 3

• Integrated yield management • Broaden unique holiday portfolio • Hotel & cruise content growth

Years 4/5

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Corporate Streamlining

• Simplification of group structure to unlock value

• Consolidation of overlapping

functions

• Move from two separate stock market listings to one listing

• Group and operational management would continue to be located in multiple locations

• Group would endeavour to optimally utilise the existing talent in both companies

Opportunities Implementation

• Expect to deliver at least €45m of cost savings per annum

• Fully delivered by Year 3

• One-off exceptional costs of approximately €45m to realise synergies

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Tax

Use of carried forward tax losses and a more efficient tax grouping possible under unified ownership structure

Tax benefits facilitated by a German domiciled and headquartered business

Based on FY13 pro forma group’s tax calculations, a cash tax benefit of €35m would have been achieved if the two businesses had been combined in that year

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Commercial Benefits

Accelerated development of new differentiated hotel and cruise concepts

Increased occupancy levels in existing hotels

Integrated yield management for hotels and cruises

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Strategic Rationale

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Core business Non-core businesses

Mainstream tour operators • Europe´s largest tour operator • Owner: TUI Travel • 2013 Rev: £12,868m / 2013 EBITA: £514m

Inbound Services • Provider of incoming services such as transfers and

excursions • Owner: TUI Travel • 2013 EBITA: £38m

Hotels • Largest leisure hotel company in Europe with 232

hotels and 155,000 beds • Owner: TUI AG • 2013 Rev: €403m / 2013 EBITA: €197m

Cruises • TUI Cruises is a JV between Royal Caribbean

Cruises and TUI AG, delivering premium cruises in the German volume market

• Hapag-Lloyd Cruises is an operator of expedition and luxury cruises in the German-speaking countries

• Owner: TUI AG • 2013 Rev: €261m / 2013 EBITA: €-14m

Online Accommodation • Comprises Accommodation Wholesaler (B2B) and

Accommodation OTA (B2C) businesses • Owner: TUI Travel • 2013 TTV: £2,077m / 2013 EBITA: £40m

Specialist & Activity • Diverse and unique collection of specialist and

activity travel businesses • Owner: TUI Travel • 2013 Rev: £1,433m / 2013 EBITA: £41m

Hapag-Lloyd Container Shipping • Global liner shipping company • Owner: TUI AG (22% stake) • 2013 Rev*: €6,567m / 2013 EBITA*: €67m

* 100% of business

Source: Company information

Combined group becomes a pure play leisure tourism business

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Revenues – FY13 £13,426m

EBITA – FY13 £706m

# Brands

£81m

98 TUI Travel Brands

Core Mainstream

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Non Core

1 - Core Mainstream excludes central costs. Core Mainstream comprises TUI Travel Mainstream, TUI Travel Inbound Services, TUI AG Hotels and TUI AG Cruises £/€ Exchange rate of 0.8407 used

+8 TUI AG Hotel & Cruise Brands

2 – Non Core excludes central costs. Non Core comprises Online Accommodation and Specialist & Activity

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Online Accommodation TTV: £2,077m

Specialist & Activity Revenue: £1,433m


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3 – Core Mainstream Revenues excludes revenues for Inbound Services

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Strategic Rationale

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Access to content accelerates top line growth

Superior customer experience Accelerate the development of TUI Travel’s existing digital platform throughout the whole holiday cycle

Holistic end-to-end customer approach Driving further growth through lifetime customer value, loyalty and retention

Leveraging TUI brand Market leading brands of tour operator and hotels/cruises

Broader customer offering Acceleration of TUI AG’s differentiated hotel and cruise development broadening the range of unique holidays and driving top line growth

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Beds / Berths

# Hotels / Cruise ships

87,373

13,585

54,383

100

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108

6,342 3

Growth Target

Growth of 3 - 5 projects p.a. targeted

Expand and internationalise to up to 40 clubs long-term

Up to 50 TUI hotels targeted (3 - 5 years)

Grow and internationalise TUI Cruises fleet – could lead to a total of 6 – 8 ships in operation

15% of TUI Travel’s existing content provided by TUI AG – Together we can grow quicker

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Accelerate content development of TUI AG’s premium hotel and cruise product positioning

Brand


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Agenda

Strategic Rationale

Key Merger Terms and Anticipated Timeline

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Mid-Sept 2014 By around Spring 2015

Binding announcement

(Rule 2.7)

Posting of Scheme Document

TUI AG EGM on capital increase and TUI Travel

Scheme meeting

Anticipated closing

Anticipated Timeline

Key Merger Terms and Anticipated Timeline All-share nil-premium merger

TUI Travel shareholders would receive 0.399 new TUI AG shares for each TUI Travel share that they own*

German domiciled group with a premium listing on the London Stock Exchange with an intention to seek inclusion in the FTSE UK Index series (including FTSE 100)

Open Market quotation would also be sought on the Frankfurt Stock Exchange

* Please refer to the Rule 2.4 announcement for further details around the proposed terms of the Merger

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The Group would benefit from balance sheet strength, flexibility

and strong free cashflow generation

The combined Group intends to review its future dividend policy following completion of the Merger and in light of its expected profits and free cash flow generation, targeting a level which is in line with TUI Travel’s current dividend policy

Dividend Considerations

Creation of the world’s number one integrated

leisure tourism business

The start of an exciting journey

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Appendix

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Klaus Mangold

Chairman of the

Supervisory Board

Joint Chief Executives

Peter Long

Joint Chief

Executive

Friedrich Joussen

Joint Chief

Executive

Focus: Delivering synergies & maximising

value creation of non-synergistic businesses

Focus: Delivering synergies and future

Mainstream development

Johan

Lundgren

Deputy CEO -

Leading all

Mainstream

Markets

William Waggott

CEO Online

Accommodation and

Specialist & Activity

Horst Baier

CFO and

divestment of

Hapag-Lloyd

Container

Shipping

Sebastian Ebel

HR/Arbeitsdirektor

CEO Platforms

Peter Long

Chairman of the

Supervisory Board

Chief Executive

Friedrich Joussen

Chief Executive

Johan

Lundgren

Deputy CEO -

Leading all

Mainstream

Markets

Executive Board Executive Board

Supervisory Board

5 new members from TUI Travel non-execs

5 of the existing TUI AG members

10 employee representatives

Proposed Structure to February 2016 Planned Structure thereafter

Balanced leadership Two tier Board structure

William Waggott

CEO Online

Accommodation and

Specialist & Activity

Horst Baier

CFO

Sebastian Ebel

HR/Arbeitsdirektor

CEO Platforms

the world’s number one integrated leisure tourism …...tui travel and tui ag disclaim any...

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