TUI readying IPO of Hapag-Lloyd stake

By Arno Schuetze

FRANKFURT (BestGrowthStock) – Europe’s biggest tour operator TUI AG (TUIGn.DE: ) is in the starting blocks to float its stake in container shipping group Hapag-Lloyd (HPLG.UL: ), taking advantage of favorable market sentiment.

Three people familiar with the matter told Reuters TUI will shortly appoint investment banks to help organize the sale.

“The banks will be picked before Christmas,” one of the people said.

Another source added that a plausible timetable for an initial public offering (IPO) was to have the prospectus ready by mid-February and price the shares in early April.

A spokesman for TUI said the company has not mandated banks explicitly to prepare for a sale of the Hapag-Lloyd stake.

“We will not rule out that it will happen but, at the moment we have not,” a TUI spokesman said.

The IPO of Hapag-Lloyd is seen as a first step in a strategic reshuffle at TUI, which is expected to lead to combining TUI and its British unit TUI Travel Plc (TT.L: ) in 2012, company and financial sources have said.

TUI until a few years ago had two main businesses, tourism and shipping. It then merged its travel operations with Britain’s First Choice in 2007, floating a minority stake in the new business on the London Stock Exchange.

A year later, it agreed to sell a majority of Hapag-Lloyd to the Albert Ballin consortium of investors so TUI could focus on tourism. But the financial crisis derailed the deal.

TUI ended up keeping a larger-than-planned 43 percent stake in Hapag-Lloyd, which it aims to divest. The stake will increase to almost 50 percent by year-end following an exercising of a convertible bond.

RISING MARKETS

TUI has valued its investment in Hapag-Lloyd at 2.5 billion euros. Chief Executive Michael Frenzel said this year that funds from selling the Hapag-Lloyd stake could help expand its tourism business and optimize its finances.

Preparations for the IPO will take less time than usual as much of the work has already been done in the run-up to a bond sale in October, sources said.

Some experts believe that TUI will not sell the whole Hapag-Lloyd stake at once, but keep some shares to benefit from a possible share price rise following the IPO.

“TUI may sell roughly half of its stake next year, just enough to drop below the 25 percent threshold,” an investment banker said.

TUI is taking advantage of a recent rise in equity markets, which has helped support a resurgence in European IPOs.

Italy’s Enel Green Power (EGPW.MI: ) and Polish insurer PZU (PZU.WA: ) recently sold shares worth billions of euros and Danish TDC (TDC.CO: ) is to follow shortly.

“The money is there. If it goes well and we do not see further external shocks we could see 15-20 public offerings in Germany in 2011,” Ute Gerbaulet, head of the Equity Capital Markets division of Germany’s second biggest lender Commerzbank (CBKG.DE: ) said.

(Additional reporting by Victoria Bryan and Philipp Halstrick; Editing by Jon Loades-Carter)

TUI readying IPO of Hapag-Lloyd stake