TUI to acquire CP Ships for Euro 1.7 billion (USD 2.0 billion) to strengthen its container shipping division Recommended cash offer to acquire CP Ships
| Service |
Other Topics
IR-News
as PDF file
more...
Compelling strategic logic – combined company will be among top 5 players in the global container shipping industry
Intention to launch rights issue to partly refinance the transaction
Hanover, August 21, 2005
TUI AG announces that it has agreed to acquire CP Ships Limited, a leading Canadian container shipping company, in an all-cash transaction for €1.7 billion (US$2.0 billion), or US$21.50 per share. As of 30 June 2005, net debt of CP Ships was €261 million (US$316 million). Pursuant to the terms of a support agreement between the companies, the Board of Directors of CP Ships has unanimously recommended that shareholders of CP Ships accept the offer.
The offer price represents a premium of 24.9% over CP Ships' volume-weighted average closing price of the last three months, and 9.7% over CP Ships' closing share price on August 19, 2005, the last business day before the offer was announced.
"This transaction will enhance growth opportunities over the longer term and will enhance value for TUI's shareholders through CP Ships' earnings potential and the realization of synergy potential in operations and ship networks", said Dr. Michael Frenzel, CEO of TUI AG. "Our enlarged shipping business will be well positioned to take advantage of the strong long term growth dynamics in the container shipping industry. This is both a compelling financial and strategic opportunity for us."
The acquisition of CP Ships will accelerate the growth of Hapag-Lloyd, TUI's container shipping business. The combined company will be a top five player, based on capacity, in the worldwide container shipping market and an important service provider across the North Atlantic. It will also offer stronger coverage in the Far Eastern, Australasian and South American trade lanes. In addition, Hapag-Lloyd believes its significantly increased size and presence in the world's shipping lanes will increase its attractiveness to partners in alliances.
"The combination of Hapag-Lloyd and CP Ships will create a company with the strength and scale to compete effectively in an industry where consolidation is changing the landscape. Furthermore, the combined company will offer enhanced resources and opportunities for both CP Ships' and Hapag-Lloyd's customers and employees", said Michael Behrendt, CEO of Hapag-Lloyd.
"The Board of CP Ships undertook a review of our business and its potential opportunities. This transaction represents immediate and attractive value for our shareholders and the Board has recommended it unanimously", said Ray Miles, CEO of CP Ships.
Hapag-Lloyd has developed post-acquisition integration plans which contemplate a synergy potential of approximately €180 million per annum by the third full year following completion of the acquisition. TUI expects integration costs to amount to approximately €100 million, mostly occurring during 2006. TUI expects the acquisition to be earnings per share enhancing at least post integration, which is expected for 2008.
The combined group currently operates 139 ships (with a further 17 on order) delivering capacity of approximately 400,000 TEU on over 100 routes spanning the globe. Before the effects of consolidation the combined shipping business would have had sales of approximately €5.7 billion and EBITDA of €588 million in 2004.
TUI has supported the successful development and organic growth of Hapag-Lloyd since its acquisition in 1997. The acquisition of CP Ships fits both this growth strategy and TUI's strategy well, which builds on two strong businesses in tourism and shipping and enables the Group to take advantage of the expected market growth in both sectors.
TUI is the number one tourism business in Europe and has a strong position in the global container shipping market. Both markets offer excellent long-term growth opportunities – shipping as a result of developments in the global economy and tourism as a result of changes to lifestyle and increases in disposable income in Western Europe and of emerging markets in Eastern Europe and Asia.
"Having seen our tourism operations start to recover in 2004 and the upward trend continuing in 2005, we view the prospects for tourism with confidence. We have continued to develop our business, in particular to adapt to the changing purchasing habits of our customers and to take advantage of our strong position in the hotel and airline sector. Through our integrated business model we are able to achieve above-average utilization of our capacity. This has been and will continue to be a winning formula," said Dr. Michael Frenzel.
TUI's offer to acquire CP Ships will be subject to customary closing conditions, inter alia, its acceptance by shareholders representing two thirds of the outstanding CP Ships shares on a fully diluted basis and the receipt of necessary regulatory approvals in Canada, the United States, Europe and certain other countries where the businesses currently operate. TUI anticipates mailing the offer to shareholders as soon as possible and closing the transaction during the fourth quarter of this year. Following the successful closing of its offer TUI plans to increase its holding in CP Ships to 100 per cent.
TUI has secured necessary bank financing to fund the offer. TUI intends to launch a rights issue to raise proceeds of the amount of approximately €1.0 billion which would reduce the need to use the bank commitments accordingly. The new shares will not be offered in the United States.
CP Ships shareholders are advised to read the Offer and Circular, the Directors Circular and other offer documentation regarding the transaction to be filed with the Canadian securities commissions and the United States Securities and Exchange Commission as they will contain important information. Shareholders may obtain a copy of the material (when available) at the Canadian SEDAR web site at www.sedar.com and at the SEC's web site at www.sec.gov.
Information on CP Ships
One of the world's leading container shipping companies, CP Ships provides international container transportation services in four key regional markets: TransAtlantic, Australasia, Latin America and Asia. Within these markets CP Ships operates 38 services in 22 trade lanes. At June 30, 2005, CP Ships' vessel fleet was 82 ships and its container fleet 441,000 TEU. Volume in 2004 was 2.3 million TEU.
CP Ships also owns Montreal Gateway Terminals, which operates one of the largest marine container terminal facilities in Canada. CP Ships is listed on the Toronto and New York stock exchanges under the symbol TEU and also in the S&P/TSX 60 Index of top Canadian publicly listed companies.
Information on TUI
TUI is the European market leader in tourism and, through its wholly owned subsidiary, Hapag-Lloyd, is a leading player in the global market for container shipping.
The tour operators of TUI trade in 17 European countries. In 2004, the Group had around 18 million customers. TUI now includes about 3,290 travel agencies, 120 aircraft, 42 incoming agencies and 285 hotels with approximately 163,000 beds in 28 countries.
TUI provides its customers with holidays from a single source – from booking in a travel agency, flights, accommodation in the Group's own hotels and customer-care provided by the Group's own incoming agencies. This vertical integration strategy covers the whole value chain in the source markets (sales markets) and the destinations (holiday areas) and provides its customers with high standards of quality from start to finish.
Through its wholly owned subsidiary Hapag-Lloyd, TUI operates one of the world's leading container shipping companies and also operates a fleet of four Cruise liners.
The container shipping operation, with 57 container ships, specialises in complex, wide-ranging logistics services. The container ships primarily supply the main routes between Europe and Asia, Europe and North America and North America and Asia. Hapag-Lloyd's container shipping operation transported 2.4 million TEU worldwide in the 2004 financial year.
The cruise ship division is the leading "premium and luxury cruise" tour operator in German-speaking countries. The cruise liners including the 5-star-plus "MS Europa" are at home on all the world's oceans.
Investor Relations Contacts:
Björn Beroleit , TUI AG
t: +49 511 566 1310
m: +49 172 808 3023
bjoern.beroleit@tui.com
Jeremy Lee, CP Ships
t: +1 514 934 5254
m: +1 514 502 3112
jeremy.lee@cpships.com
Media Contacts:
Kuzey Alexander Esener, TUI AG
t: +49 511 566 1487
kuzey.esener@tui.com
Klaus Heims, Hapag-Lloyd AG
t: +49 40 3001 2263
m: +49 172 447 0135
klaus.heims@hlag.de
Ian Blair, Hill & Knowlton (TUI/Hapag-Lloyd)
t: +1 416 413 4694
m: +1 416 522 0717
ian.blair@hillandknowlton.ca
Elizabeth Canna, CP Ships
t: +44 (0)1293 861 921
m: +41 (0)79 691 3764
elizabeth.canna@cpships.com
This document is not an offer for sale of subscription rights or new shares in the United States. The subscription rights and the new shares have not been and will not be registered under the United States Securities Act of 1933, as amended, or under the securities laws of any state of the United States, and may not be offered, sold or delivered in the United States. TUI AG does not intend to register any portion of the offering in the United States or to conduct a public offering of subscription rights or new shares in the United States.
Not for distribution in the United States, Canada, Australia or Japan.
If we comment on forecasts or expectations in this announcement or if our statements relate to the future, these statements may be associated with known and unknown risks and uncertainties. Actual outcomes and developments may, therefore, deviate significantly from the expressed expectations and assumptions. In addition, the performance of financial markets and exchange rates as well as national and international law amendments, particularly with regard to tax regulations, may have an influence. Except as provided by law, the company assumes no obligation to update future statements.