With IPO markets volatile and its last attempt at selling off Hapag-Lloyd in 2009 not going to plan, forcing TUI to keep a larger stake than it envisaged, what are its options this time around?
IPO
TUI's board had approved plans for a partial IPO of Hapag-Lloyd in March. However, the Albert Ballin consortium, which is made up of German investors and owns 50.2 percent of the shipping group, said just over two weeks later that it was postponing the decision due to market uncertainty following the Japan earthquake and North African uprisings.
"Who is going to float a business in this market? Why would you do it? You might get a float away but it's the aftermarket," a source close to the supervisory board told Reuters.
With several big IPOs pulled or delayed recently, investors are expecting discount on prices.
"If you do want to do it in this environment you're going to have to take a big haircut on the price because someone's got to bear the risk. The view is if you don't need to do it, don't do it," the source said.
With time running away, it now seems likely that any IPO would be delayed until the second half of the year.
"The conditions for a potential IPO have improved since the disaster in Japan, but clearly a divestment of the remaining stake in Hapag-Lloyd via a sale to a strategic/financial investor continues to be on the cards," Commerzbank analyst Johannes Braun said.
Anchor Investor
In a dual-track process, TUI is also working on finding an investor for its stake in Hapag-Lloyd.
TUI has already announced that it will sell an 11.3 percent stake in Hapag-Lloyd to Albert Ballin in a 315 million euro ($467 million) deal, thus cutting its stake to 38.4 percent.
Among the options for TUI's remaining stake could be a buyer from a sovereign wealth fund.
The group is in talks with the state of Oman and Chinese logistics company HNA and has asked that binding bids be submitted by late May, according to sources. TUI has declined to comment on the identity of the buyers, stating only that it is in talks with potential investors.
"As the crises in North Africa and the tsunami in Japan have weakened the stock market environment, TUI might get higher proceeds from the selling process," Silvia Quandt analyst Stefan Kick wrote in a recent research note.
2012 Opton
If all else fails, TUI has an option to sell its stake in Hapag-Lloyd to the Albert Ballin consortium from Jan. 1, 2012.
When finalising the Hapag-Lloyd deal in 2009, TUI and the Albert Ballin consortium agreed not only first right of refusal on the stake, but also an obligation for the consortium to acquire the stake.
A source at TUI said this option meant the group was relaxed about the Hapag-Lloyd stake and could take its time to ensure it got the right price, whether via IPO or a sale. (Reuters)
