Thursday, August 23, 2007

TUI Shares Rise for Second Day

TUI Shares Rise for Second Day on Breakup Speculation
By Meera Bhatia
Aug. 23 (Bloomberg)

TUI AG, Europe's largest travel company and the owner of the Hapag-Lloyd shipping line, climbed for a second day in Frankfurt trading on speculation the company's shipping and tourism units may be split.

TUI shares rose 25 cents, or 1.4 percent, to 18.39 euros, after gaining 5.2 percent yesterday. The two-day gain of 6.6 percent was the steepest since March 20.

``The rumors are the possible split up of the company,'' said Thomas Nagel, a trader at Equinet AG in Frankfurt. ``The possibility could be into shipping and tourism.''

TUI gets more than two-thirds of revenue from tourism and the rest from shipping, where sales declined in the first two quarters of this year. The stock has risen 7.2 percent since shipping billionaire John Fredriksen's Geveran Trading Co. Ltd., based in Limassol, Cyprus, said in an Aug. 21 filing it held 7.72 million TUI voting shares, or a 3.1 percent stake.

TUI has ``had talks with Geveran and representatives of the company,'' spokesman Kuzey Esener said today by phone. ``We've had talks with them in recent months, as with any other investor.''

Esener said Geveran had given ``no indication'' that it intends to seek a breakup of the company. Asked whether the investor plans to raise its stake, he declined to comment.

Shipping Rates

Fredriksen has used acquisitions and mergers to build the oil-tanker company Frontline Ltd. and the salmon farmer Marine Harvest ASA into the world's biggest in their industries. He also leads Golden Ocean Group Ltd., a commodities-shipping line.

The billionaire, who has been at the forefront of industry consolidation within the markets he enters, bought control of Frontline, then a Stockholm-listed company, in 1996. A series of takeovers -- London Overseas Freighters in 1997, ICB in 1999 and Golden Ocean in 2000 -- made it the world's largest tanker company.

Tor Olav Troim, a director at several companies controlled by Fredriksen, declined to comment on whether Geveran plans to increase the stake, saying only ``we like the company.''

``Geveran or other players could buy more in TUI and split up the company,'' Nagel said.

Shares of TUI have gained 21 percent this year, helped by speculation that Germany's billionaire Oetker and Herz families may consider buying Hapag-Lloyd. TUI has no plans to sell the shipping business, Handelsblatt reported May 15, citing Chief Executive Officer Michael Frenzel. Frenzel rejected speculation that the Oetker family may buy a stake in TUI.

``I hear rumors about a possible break up of the company every two to three months,'' said Oliver Caspari, an analyst at Bankhaus Lampe in Dusseldorf with a ``hold'' rating on TUI.

Geveran's stake may be fueling the stock's gains, he added. ``I have also heard that container shipping rates are going up which is good for TUI and Hapag-Lloyd.''

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