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First Choice to tie up with TUI First Choice to tie up with TUI
(about 2 hours later)
UK travel firm First Choice said it will merge with the tourism division of German rival TUI, creating a firm with 27 million customers. UK travel company First Choice will merge with the tourism division of German rival TUI, creating Britain's biggest tour operator.
First Choice said the new company will be called TUI Travel. It will be headquartered in the UK and there are plans to list its shares in London. The new firm, TUI Travel, will have 27 million customers and £12bn in sales. It will be based in the UK and there are plans to list its shares in London.
TUI said it would make an announcement at 0900 GMT about its "planned merger with First Choice". Thomson Holidays-owner TUI will have a 51% stake in the new firm, with First Choice controlling the remaining 49%.
The two companies believe the merger will save £100m a year.The two companies believe the merger will save £100m a year.
TUI Travel will be 51% owned by TUI and 49% owned by the shareholders of First Choice.
TUI's shares jumped by 9% in Frankfurt, while First Choice added 9% in London.
Different marketDifferent market
First Choice said that "the strong strategic fit of the businesses, combined with a leading management team, provides the opportunity to create one of the world's most profitable travel groups".
It added that the company would deliver "sustainable revenue and long-term earnings growth while deriving cost advantage".
TUI's shares jumped by 9% in Frankfurt, while First Choice's gained more than 7%.
The move comes as travel companies try to cut costs and boost sales, at a time when many travellers are booking their own holidays and hunting deals online.The move comes as travel companies try to cut costs and boost sales, at a time when many travellers are booking their own holidays and hunting deals online.
"The question remains whether TUI can achieve solid margins in the tourism business in the medium term," said Nils Lesser, an analyst at Merck Finck.
Last month, the UK's MyTravel said it would combine with Germany's Thomas Cook.Last month, the UK's MyTravel said it would combine with Germany's Thomas Cook.
TUI employs about 8,000 staff in the UK and runs Thomson Holidays with nearly 730 travel shops nationwide.TUI employs about 8,000 staff in the UK and runs Thomson Holidays with nearly 730 travel shops nationwide.
It recently announced plans to cut a total of 3,600 jobs Europe-wide, with 2,600 going in the UK. The changes are part of a 250m-euro (£168m) cost-cutting programme. It recently announced plans to cut a total of 3,600 jobs across Europe, with 2,600 going in the UK. The changes are part of a 250m euro (£168m) cost-cutting programme.
TUI UK's and Thomson Travel's headquarters are in Luton. The group's airline, Thomson Fly, is based in Coventry.TUI UK's and Thomson Travel's headquarters are in Luton. The group's airline, Thomson Fly, is based in Coventry.