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Europe’s largest tour operator Tui is considering delisting from the London Stock Exchange in the latest blow to the UK market.
The company, which is listed in London and Frankfurt, said on Wednesday that it had recently been approached by shareholders questioning whether its current structure was “optimal and advantageous”.
While Tui has had a dual listing since 2014, the Hanover-based company said that over the past four years a large part of the volume of trading in its shares had migrated from London to Frankfurt.
Potential benefits of moving to a single listing would include a more prominent position on Frankfurt’s MDAX50 index and cost savings, the company said. A move would need the approval of 75 per cent of shareholders.
The market for London listings remains in the doldrums. It has suffered from a steady flow of companies opting to list in New York, or in some cases, switching their listing to Wall Street in search of high valuations and deeper pools of capital.
“With a market capitalisation of around €3.5bn, a dual listing just does not make any sense,” Hansjörg Pack, a portfolio manager at DWS, said of Tui, pointing to the expense of two listings and the splintering of liquidity in the company’s shares. DWS has a 3 per cent stake in Tui.
Dublin-based packaging company group Smurfit Kappa is moving its primary listing to the US and gambling company Flutter is expected to follow suit after announcing that it would launch a secondary listing in the US early next year. Earlier this year, UK polling company YouGov said it was weighing a US listing.
Tui added that another benefit of a possible listing change was the “potential benefits to European Union airline ownership and control requirements”. Airlines need to be owned and controlled by EU entities to benefit from being part of the single market for aviation.
But Sebastian Ebel, Tui’s chief executive, stressed that there was “no political background” to the review. “It’s just that it could make the structure easier,” he said, adding that the UK’s outbound tourism market “is the most important market for us and therefore there is the full focus of the potential improvements in the business here”.
The listing review came as Tui forecast significant growth in revenues and profits in the year ahead, adding to evidence that the post-pandemic travel boom is continuing, despite stubborn inflation and high interest rates.
The tour operator said it expected group revenues to grow by at least 10 per cent in 2024 from €20.7bn in the 12 months to the end of September. It also projected that underlying earnings before interest, taxes, depreciation and amortisation would grow by at least 25 per cent next year, up from €977mn this year.
Tui’s shares — both those listed in London and Frankfurt — rose more than 10 per cent on Wednesday. The company has had a dual listing since it was formed out of the merger of British tour operator Tui Travel and its German parent Tui AG.
Richard Clarke, an analyst at Bernstein, said the dual listing was “a quirk of history”. “If you were creating Tui from scratch, there’s no way you would list it on two exchanges,” he said.
A motion on the delisting could be presented to its annual general meeting in February.
Mathias Kiep, Tui’s chief financial officer, said that more than three-quarters of Tui’s shares “are now held in Germany or in the German register”.
Pack, the portfolio manager at DWS, said that the prospect of Tui having a single listing in Frankfurt was a “rare bit of good news”, for the London market, pointing to the decision of industrial gases group Linde to delist and German companies such as BioNtec and Birkenstock choosing to list in the US.
With additional reporting by Donato Paolo Mancini in London
