(Alliance News) - Tui AG on Thursday said it has agreed to sell its 49% stake in the Riu Hotels SA joint venture for EUR670 million, giving a total enterprise value of EUR1.5 billion.
The Hanover, Germany-based holiday operator sold the stake to Saranja SL, an entity of Riu Group Ltd, owned by siblings Carmen and Luis Riu.
The joint venture includes a real estate portfolio of 21 properties, and the disposal is part of Tui's effort to refocus on its hotel and holiday brands - Tui Blue, Riu, Robinson, and Tui Magic Life - by reducing capital tied up in real estate. Riu Hotels made underlying earnings before interest and tax of EUR28 million in the financial year that ended September 30 last year on EUR226 million in revenue.
Tui will receive EUR540 million when the transaction is completed with the remaining earn-out element to be delivered once Riu Hotels SA delivers its 2022 and 2023 financial year operating budget.
Tui expects the sale to produce significant gain on book value. The company said that it expects the sale to be completed in the late summer once financing agreement are in place and regulatory approvals received.
The management of around 100 other hotels and resorts jointly managed by Tui and Riu remain unaffected by this sale.
Tui shares were trading up 0.2% at 433.40 pence each in London on Friday morning.
By Scarlett Butler; scarlettbutler@alliancenews.com
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TUI AG (TUI)