TUI Travel PLC forms JV with S-Group

The joint venture can also announce that they have agreed to acquire majority stakes in certain assets of two key tour operators and travel agency groups in Russia and Ukraine. The joint venture has also signed a letter of intent with Mostravel, a Turkey and Egypt destination specialist.1
 
Highlights include:
Signature of a definitive joint venture agreement between TUI Travel and S-Group;
Signature of an agreement for the subsequent purchase by the joint venture of:
a 75% stake in certain assets of VKO Group, a tour operator and travel agency group based in Russia;
a 75% stake in certain assets of Voyage Kiev, a tour operator and travel agency group based in Ukraine;
Signature of a letter of intent by the joint venture to own a 75% controlling stake in Mostravel, a Turkey and Egypt destination specialist based in Moscow;
 
The joint venture (to be owned 51% by S-Group and 49% by TUI Travel) will be an investment holding company, financed proportionally by both parties. The joint venture is expected to invest up to $40m by 31-Dec-09, with TUI Travel PLC's share of this investment expected to be up to $20m, either in cash or the value of existing assets contributed to the joint venture.
 
The Russian and CIS leisure tourism markets have experienced significant growth in outbound travel in recent years and present strong long-term growth opportunities.In 2008, six million Russians and one million Ukrainians travelled on traditional sun and beach holidays, which combined is equivalent to a third of the size of the UK
sun and beach charter market.
 
Commenting on the agreements, Chief Executive of TUI Travel PLC, Peter Long, said: “TUI Travel will be the first major international tour operator with a significant presence in Russia and CIS. We are delighted with our partnership with S-Group which combines their local business knowledge and expertise with our vast experience in leisure travel. The agreements with VKO, Voyage Kiev and Mostravel will provide us with the scale and expertise to make a large impact on these markets.”
 
Managing Partner, S-Group Capital Management, Vladimir Yakushev, said: “We are delighted to be a partner of the leading European tour operator and are excited about the growth potential in the tourism markets in Russia and CIS. These deals start consolidating the market and will help to introduce market leading practices which will enable customers in Russia and Ukraine to enjoy high international tourism standards.”

(c) Centre for Asia Pacific Aviation. Date posted: 16-Apr-09