DGAP-Adhoc: TUI AG: RECOMMENDED ALL-SHARE MERGER OF TUI TRAVEL PLC AND TUI AG


TUI AG  / Key word(s): Strategic Company Decision/Mergers & Acquisitions

15.09.2014 08:02

Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted
by DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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AD-HOC ANNOUNCEMENT ACCORDING TO SECTION 15 OF THE GERMAN SECURITIES
TRADING ACT (WPHG)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR
INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION
OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND TUI
TRAVEL SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO
THE NEW TUI AG SHARES EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME
DOCUMENT AND THE TUI AG PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN
DUE COURSE

FOR IMMEDIATE RELEASE

15 SEPTEMBER 2014

RECOMMENDED ALL-SHARE MERGER OF TUI TRAVEL PLC AND TUI AG

Further to the announcements made by TUI Travel and TUI AG on 27 June 2014
and 25 July 2014, the Independent Directors of TUI Travel and the Executive
Board (Vorstand) of TUI AG are pleased to announce that they have reached
agreement on the terms of a recommended all-share nil-premium merger of TUI
Travel and TUI AG, which is to be implemented by way of a Scheme of
Arrangement of TUI Travel.

Under the Merger, which will be subject to the Conditions and terms set out
in Appendix I to this announcement and to the further terms to be set out
in the Scheme Document, TUI Travel Shareholders (other than TUI AG and
certain connected parties) will receive 0.399 New TUI AG Shares for each
TUI Travel Share held by them at the Scheme Record Time.

Taking into consideration TUI AG's existing stake in TUI Travel, the Merger
is expected to result in existing TUI Travel Shareholders (other than TUI
AG and certain connected parties) owning 46% of the Combined Group and
existing TUI AG Shareholders owning 54% of the Combined Group, on a
fully-diluted basis.

Based on the Exchange Ratio and the closing share prices as at 12 September
2014 (being the last practicable date prior to the release of this
announcement), the Combined Group would have a fully-diluted equity value
of approximately EUR6.5 billion (£5.2 billion).

The Combined Group will be German domiciled with a premium listing on the
London Stock Exchange, in parallel with a secondary market quotation on a
German stock exchange. The FTSE Nationality Advisory Committee has
announced that, subject to Completion, it would allocate the Combined Group
a UK classification for FTSE index inclusion purposes.

TUI Travel Shareholders (including TUI AG) will receive a second interim
dividend of 20.5 pence per TUI Travel Share, to include 10.5 pence per TUI
Travel Share in lieu of a final dividend for the financial year 2013/14.

The Merger will result in the creation of the world's number one integrated
leisure tourism business, clearly positioned as a fully
vertically-integrated tour operator with enhanced long-term growth
prospects.

Mr. Alexey Mordashov, TUI AG's largest shareholder, has confirmed his
support for the Merger.

Reasons for the Merger

Accelerate growth and future-proof the vertically integrated business model

  - Opportunity to accelerate the long-term growth of the Combined Group by
    accessing high-quality hotel and cruise ship content on an exclusive
    basis

      - Enhances certainty of supply for the continued growth of Unique
        Holidays

  - Enhances and de-risks Mainstream content growth as a result of
    integration

      - Provides the potential for the Combined Group to double the pace of
        existing TUI AG content growth through further vertical integration
        - more than 30 additional hotels and up to two additional cruise
        ships

      - Historic annual performance suggests a potential contribution to
        EBITA of EUR1.4 million (£1.1 million) per hotel and a substantial
        contribution per ship (under the TUI Cruises business model)(See
endnote 1)

      - Acceleration of content growth is expected to drive customer and
        top-line growth

  - Reinforces the Combined Group's competitive advantage versus
    non-integrated leisure travel businesses through further control over
    the end-to-end customer experience

  - The Merger is expected to deliver material value to all TUI Travel
    Shareholders and existing TUI AG Shareholders, with a continuation of
    strong leadership

Deliver significant synergies, increased occupancy and cost savings

  - The Merger is expected to deliver significant synergies

      - Corporate streamlining - potential cost savings of at least EUR45
        million (£36 million) per annum

      - Significant tax optimisation - potential for a substantial
        reduction in the Combined Group's ongoing tax rate - a unified
        ownership structure would have delivered a decrease in the
        underlying effective tax rate of around 7 percentage points to 24%
        in the financial year 2012/13 (see endnote 2)

  - Significant increase in occupancy levels achievable through joint yield
    management

      - Each 1 percentage point improvement in occupancy would be expected
        to deliver approximately EUR6.1 million (£4.9 million) of
        additional profit (see endnote 3)

      - TUI Travel's vertically integrated Magic Life clubs have an
        occupancy level which is 5 percentage points higher than the level
        in TUI AG's hotel and resorts portfolio for the financial year
        2012/13 (see endnote 4)

  - Additional cost savings achievable through the integration of Inbound
    Services into the Mainstream tourism business, resulting in net cost
    savings of EUR20 million (£16 million) annually (see endnote 5)

Strategy of the Combined Group

The Combined Group will utilise the scale of its fully-integrated
Mainstream tourism business - content, Unique Holiday experiences and
distribution - whilst driving growth and value from its non-Mainstream
businesses, to enhance its growth and margin profile, thereby
future-proofing its long-term sustainable competitive position.

In particular, the Combined Group will:

  - Deliver a superior end-to-end customer experience through a
    fully-integrated Mainstream tourism business

  - Accelerate long-term growth supported by an asset-right business model
    based on an optimal mix of owned and managed hotels and cruise ships,
    with a targeted minimum required return on capital of 15% for new
    content (see endnote 6)

      - In the financial year 2012/13, approximately 50% of TUI AG hotels
        were operated under management contracts, approximately 9% were
        leased or franchised and the remainder were owned

  - Maximise the growth and value of the Online Accommodation and
    Specialist & Activity businesses

  - Treat the TUI AG stake in Hapag-Lloyd AG as a business for disposal and
    finalise the exit from Container Shipping

  - Focus on balance sheet strength, flexibility and strong free cash flow
    generation with a view to increasing shareholder returns from the
    Merger

Financial effects of the Merger 

  - Merger is expected to be EPS accretive (see endnote 7)  for both sets
of shareholders
    from the first full financial year post-Merger (see endnote 8)

      - Strong EPS accretion for TUI Travel Shareholders

      - Strong cash flow/dividend benefit for TUI AG Shareholders

  - Strong EPS accretion for both sets of shareholders thereafter

  - The New Executive Board of TUI AG is confident that value creation for
    both sets of shareholders should result from the creation of a pure
    play integrated leisure tourism business and from the elimination of
    the current TUI AG structural discount

Continuation of existing strong leadership

  - Expanded Executive Board of TUI AG and enlarged number of
    shareholder-elected members of the Supervisory Board of TUI AG, to be
    drawn equally from TUI AG and TUI Travel

  - Peter Long and Friedrich Joussen to be joint CEOs of the Combined
    Group, with Peter Long planned to become Chairman of the Supervisory
    Board of TUI AG and Friedrich Joussen leading the Combined Group as
    sole CEO from February 2016

Dividend

  - The TUI Travel interim dividend of 4.05 pence per TUI Travel Share
    previously announced by TUI Travel will become payable on 3 October
    2014

  - In addition, TUI Travel will, immediately prior to Completion, declare
    and pay a second interim dividend of 20.5 pence per TUI Travel Share,
    to include 10.5 pence per TUI Travel Share in lieu of a final dividend
    for the financial year 2013/14. This second interim dividend will be
    payable to those TUI Travel Shareholders on the register of members of
    TUI Travel at the Scheme Record Time and will be paid prior to
    Completion conditional on the Court Order having been granted at the
    Scheme Court Hearing

  - TUI Travel Shareholders will not be eligible for any final dividend
    paid by TUI AG for the financial year 2013/14.  TUI AG anticipates that
    it will declare a final dividend for the financial year 2013/14
    (subject to adequate balance sheet capacity, recommendations by the
    Executive Board of TUI AG and the Supervisory Board of TUI AG and
    approval at the TUI AG Annual General Meeting in 2015) of EUR0.33 per
    TUI AG Share.  The anticipated dividend of TUI AG would represent an
    equivalent amount to the originally anticipated final dividend of 10.5
    pence per TUI Travel Share, reflecting the agreed Exchange Ratio (which
    already takes account of the 4.05 pence TUI Travel interim dividend).
    The TUI AG dividend for the financial year 2013/14 will be paid after
    the TUI AG Annual General Meeting in 2015 to TUI AG Shareholders (other
    than holders of New TUI AG Shares)

  - TUI AG and TUI Travel each confirm that neither of them will make any
    distribution to their shareholders, other than the aforementioned
    dividends, either in respect of the financial year 2013/14 or before
    Completion

  - Following Completion, the Combined Group intends to adopt a dividend
    policy in line with TUI Travel's present progressive dividend policy
    under which dividends grow broadly in line with earnings. Provided the
    performance of the Combined Group develops in line with expectations,
    the Combined Group will target an increase in its dividend per share
    for the financial years 2014/15 and 2015/16 of 10% in excess of the
    underlying growth in the Combined Group's earnings per share.  This is
    subject to adequate balance sheet capacity, recommendations by the
    Executive Board of TUI AG and the Supervisory Board of TUI AG and
    approval at the respective TUI AG Annual General Meeting in the
    relevant year

  - The net dividend receivable from TUI AG may be affected by German
    withholding tax. Further details are set out in paragraph 7 of this
    announcement

Financing

  - Credit facility agreements have been entered into regarding new credit
    facilities for the Combined Group, in an aggregate amount of EUR1.55
    billion

      - These facilities will provide available financing for the Combined
        Group's general corporate and working capital requirements from
        Completion, replacing TUI Travel's existing revolving credit
        facility

  - In addition, a credit facility agreement has been entered into for a
    EUR600 million term loan facility available at Completion, which it is
    envisaged will be refinanced by the issue of senior unsecured notes
    shortly after this announcement

Directors' irrevocables

  - TUI AG has received irrevocable undertakings to vote in favour of the
    Merger from the Independent Directors of TUI Travel, their families and
    related trusts, who hold or are beneficially entitled to TUI Travel
    Shares, representing in aggregate approximately 0.100% of TUI Travel's
    ordinary share capital in issue on 12 September 2014 (being the last
    practicable date prior to the release of this announcement)

  - TUI AG has received an irrevocable undertaking to vote in favour of the
    Merger at the relevant TUI Travel shareholder meetings from Peter Long
    (who is a director of TUI Travel, but not one of the Independent
    Directors of TUI Travel), his family and related trusts, who hold or
    are beneficially entitled to TUI Travel Shares, representing in
    aggregate approximately 0.267% of TUI Travel's ordinary share capital
    in issue on 12 September 2014 (being the last practicable date prior to
    the release of this announcement)

  - Friedrich Joussen, Horst Baier and Sebastian Ebel, who are directors of
    TUI Travel but not Independent Directors of TUI Travel, do not have
    interests in TUI Travel Shares and neither do their respective families
    or related trusts

Commenting on the Merger

Sir Michael Hodgkinson, Deputy Chairman and Senior Independent Director of
TUI Travel, said:

"The Board of TUI Travel is focused on delivering shareholder value and I
and my fellow independent directors are confident that the finalised terms
of this Merger represent significant value for our shareholders. By
simplifying the structure and combining the two businesses substantial
synergies and cost savings will be realised. In addition, the potential to
deliver material commercial benefits will be unlocked. Peter Long's
position as, firstly joint Chief Executive with continued responsibility
for the former TUI Travel businesses, and then in 2016 as Chairman of the
Supervisory Board should also serve to give TUI Travel shareholders
confidence in the long-term prospects for the group."

Prof. Dr Klaus Mangold, Chairman of the Supervisory Board of TUI AG, said:

"The Supervisory Board of TUI AG strongly endorses the merger of the two
companies. Significant operational and financial benefits are expected by
the vertical integration which enables further efficiency gains and growth
owing to a new group structure. The listing of the TUI AG shares on the
premium segment of the London Stock Exchange and the FTSE UK Index makes
the shares attractive for international investors, the euro listing on the
Frankfurt Open Market secures market access in Germany and emphasises the
international nature of the group. With this euro listing on a German stock
exchange we want to ensure that TUI AG shares will remain an attractive
investment for private investors. Further, the newly formed Integration
Committee of the Supervisory Board of TUI AG will actively accompany the
phase of re-orientation and the merger of both companies as well as attend
to the aspired benefits."

Peter Long, Chief Executive of TUI Travel and Member of the Executive Board
of TUI AG, said:

"The Merger will strengthen and future-proof our combined business by
enhancing the certainty of long-term Unique Holiday growth, and by
reinforcing our competitive advantage through further control over the
end-to-end customer experience. Friedrich Joussen and I are committed to
working closely to ensure that we achieve significant synergies, cost
savings, commercial benefits and long-term growth as the world's number one
integrated leisure tourism business. All of which will contribute to
significant earnings accretion from the first full financial year post
Completion and growth in shareholder returns."

Friedrich Joussen, Chief Executive of TUI AG and Chairman of TUI Travel,
said:

"We have conducted the negotiations goal orientated, seriously and fairly
and have completed them successfully. The result is a clear and joint
commitment to the merger of the companies. The potential cost savings are
significantly higher than expected at the start of the negotiations. The
new TUI will be the leading integrated tourism group in the world and an
innovative pioneer in the industry. We will set new standards in our
industry with respect to growth, quality as well as brand promise and
create significant opportunities for shareholders, customers and our
employees. Our shareholders benefit from faster growth, higher margins and
an attractive dividend policy. Our customers receive unprecedented access
to exclusive products and services and thereby individual and unique
holiday experiences around the globe. Our 74,000 employees worldwide in
approximately 130 countries will have completely new development and career
prospects. The new TUI will definitely be a truly international group and
thus also one of the most international employers in Europe."

Mr. Alexey Mordashov, TUI AG's largest shareholder, has confirmed his
support for the Merger and said:

"I am pleased with the recent business development of both companies. The
combination will serve to improve the tourism business model and help drive
future business growth for the benefit of both shareholder groups."

Recommendations

The Independent Directors of TUI Travel, who have been so advised by
Lazard, consider the terms of the Merger to be fair and reasonable. In
providing its advice, Lazard has taken into account the commercial
assessments of the Independent Directors of TUI Travel. Accordingly, the
Independent Directors of TUI Travel intend unanimously to recommend TUI
Travel Shareholders to vote in favour of the Scheme at the TUI Travel Court
Meeting and the resolutions to be proposed at the TUI Travel General
Meeting, as the Independent Directors of TUI Travel who hold or are
beneficially entitled to TUI Travel Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of 1,135,168 TUI Travel
Shares representing in aggregate approximately 0.100% of TUI Travel's
ordinary share capital in issue on 12 September 2014 (being the last
practicable date prior to the release of this announcement). Bank of
America Merrill Lynch and Barclays have also provided financial advice to
the Independent Directors of TUI Travel in respect of the Merger.

Peter Long is a director and Chief Executive of TUI Travel and is also a
member of the Executive Board of TUI AG. As such, Peter Long is not
considered to be an Independent Director of TUI Travel for the purposes of
TUI Travel's discussion of, or decisions in relation to, the Merger and has
not been involved in or voted on such decisions. Similarly, Peter Long has
not participated in decisions in relation to the Merger by the Executive
Board of TUI AG.  Accordingly, Peter Long has not participated in the
formal recommendation of the Merger by the Independent Directors of TUI
Travel or the Executive Board of TUI AG contained in this announcement.
Peter Long's comment on the Merger is set out above.

Also, as set out above, TUI AG has received an irrevocable undertaking to
vote in favour of the Merger at the relevant TUI Travel shareholder
meetings from Peter Long, his families and related trusts, who hold or are
beneficially entitled to TUI Travel Shares, representing in aggregate
approximately 0.267% of TUI Travel's ordinary share capital in issue on 12
September 2014 (being the last practicable date prior to the release of
this announcement. Peter Long, his families and related trusts have no
current interests in TUI AG Shares.

Friedrich Joussen, Horst Baier and Sebastian Ebel, who are directors of TUI
Travel are either members of the Executive Board of TUI AG or members of
TUI AG's senior management. As such, they are not considered to be
Independent Directors of TUI Travel for the purposes of TUI Travel's
discussion of, or decisions in relation to, the Merger and have not
participated in such discussions or voted on such decisions. Neither they
nor their family and related trusts hold any interests in TUI Travel
Shares.

The Executive Board of TUI AG (other than Peter Long who has recused
himself as set out above) considers the Merger to be in the interests of
existing TUI AG Shareholders.  The Executive Board of TUI AG (other than
Peter Long) has been advised by Deutsche Bank and Greenhill in relation to
the Merger. In providing their advice, Deutsche Bank and Greenhill have
taken into account the commercial assessments of the Executive Board of TUI
AG (other than Peter Long).

Accordingly, the Executive Board of TUI AG (other than Peter Long) intend
unanimously to recommend existing TUI AG Shareholders to vote in favour of
all of the resolutions to be proposed at the TUI AG EGM to approve the
Direct Capital Increase, the Conditional Capital Increase and related
matters, as the members of the Executive Board of TUI AG (other than Peter
Long) who hold or are beneficially entitled to TUI AG Shares intend to do
in respect of their own beneficial holdings of 158,798 TUI AG Shares
representing in aggregate approximately 0.055% of TUI AG's share capital in
issue on 12 September 2014 (being the last practicable date prior to the
release of this announcement).

The Supervisory Board of TUI AG intends unanimously to recommend existing
TUI AG Shareholders to vote in favour of all of the resolutions to be
proposed at the TUI AG EGM to approve the Direct Capital Increase, the
Conditional Capital Increase and related matters, as the members of the
Supervisory Board of TUI AG who hold or are beneficially entitled to TUI AG
Shares intend to do in respect of their own beneficial holdings of 27,955
TUI AG Shares representing in aggregate approximately 0.010% of TUI AG's
ordinary share capital in issue on 12 September 2014 (being the last
practicable date prior to the release of this announcement). The
Supervisory Board of TUI AG has obtained an additional separate fairness
opinion from J.P. Morgan with respect to the Exchange Ratio.

Next steps

The Merger will be voted on by TUI Travel Shareholders at the TUI Travel
Court Meeting and at the TUI Travel General Meeting. Resolutions required
to be passed in connection with the Merger will be voted on by existing TUI
AG Shareholders at the TUI AG EGM. In order for the Scheme to become
Effective:

  - it must be approved by a majority in number of the TUI Travel Scheme
    Shareholders who are on the register of members of TUI Travel at the
    Voting Record Time and who are present and voting (and entitled to
    vote) at the TUI Travel Court Meeting, either in person or by proxy,
    representing at least three quarters in nominal value of the TUI Travel
    Scheme Shares held by such holders. TUI Travel Shares in which TUI AG
    and certain of its connected parties have an interest will not be
    eligible to be voted at the TUI Travel Court Meeting;

  - the Special Resolution approving the Reduction of Capital and such
    other matters as may be necessary to implement the Scheme (requiring a
    majority of at least three quarters of the votes cast by person or by
    proxy) must be passed by TUI Travel Shareholders at the TUI Travel
    General Meeting;

  - the resolutions necessary to approve the Direct Capital Increase and
    the Conditional Capital Increase (each requiring a majority of at least
    three quarters of the share capital voting on such resolution) must be
    passed at the TUI AG EGM;

  - the proposed election of the new members of the Supervisory Board of
    TUI AG set out in the TUI AG EGM Invitation, being certain of the
    existing independent non-executive directors of TUI Travel, and the
    proposed resolution regarding the amendment of the TUI AG Charter to
    allow TUI AG to appoint one or more chairmen to the Executive Board (as
    defined in the TUI AG Charter) must be passed at the TUI AG EGM;

  - the resolution of the Direct Capital Increase and the resolution of the
    Conditional Capital Increase must be registered at the commercial
    registries in Hanover and Charlottenburg/Berlin;

  - the Court must sanction the Scheme with or without modification (but
    subject to any such modification being acceptable to TUI AG and TUI
    Travel) and confirm the Reduction of Capital and:

      - office copies of the Court Order (and the Statement of Capital)
        must be delivered to the Registrar of Companies; and

      - if the Court so orders for it to become effective, the Court Order
        and the Statement of Capital must be registered by the Registrar of
        Companies;

  - the UK Listing Authority must acknowledge to TUI AG or its agent that
    the application for the admission of the TUI AG Shares to the premium
    listing segment of the Official List of the UK Listing Authority has
    been approved and will become effective as soon as the UK Listing
    Authority's decision to admit the TUI AG Shares is announced  and the
    London Stock Exchange must acknowledge to TUI AG or its agent that the
    TUI AG Shares will be admitted to trading on the London Stock
    Exchange's main market for listed securities; and

  - Deutsche Bank (as German listing agent of TUI AG) must not have
    received any notification or other communication from the Frankfurt
    Stock Exchange or any of the Stuttgart, Hamburg, Berlin, Düsseldorf,
    Hanover or Munich stock exchanges that admission to trading of all the
    New TUI AG Shares on the regulated market of the Frankfurt Stock
    Exchange with simultaneous admission to the segment of the regulated
    market with additional post-admission obligations (Prime Standard) of
    the Frankfurt Stock Exchange as well as the regulated markets of the
    stock exchanges in Stuttgart, Hamburg, Berlin, Düsseldorf, Hanover and
    Munich, will not be granted pursuant to an application made for such
    trading.

It is expected that the Scheme Document, containing further information
about the Merger and notices of the TUI Travel Court Meeting and the TUI
Travel General Meeting, will be posted to TUI Travel Shareholders within
the next 28 days.

It is expected that the TUI AG Prospectus, containing information about the
New TUI AG Shares and the Combined Group, will be published at or around
the same time as the Scheme Document is made available to TUI Travel
Shareholders.

It is expected that the TUI AG EGM Invitation, containing details of the
Merger and notice of the TUI AG EGM at which resolutions will be proposed
for the approval of the Direct Capital Increase, the Conditional Capital
Increase and other matters relating to the Merger by existing TUI AG
Shareholders, will be published by 19 September 2014.

It is currently anticipated that the Scheme will become Effective by the
end of December 2014, subject to the satisfaction or (where applicable)
waiver of the Conditions, certain terms set out in Appendix I to this
announcement and the further terms to be set out in the Scheme Document. 
However, it should be noted that there is no certainty that all of the
Conditions will be satisfied or waived by that date or that the Scheme will
become Effective by that date.

In particular, certain resolutions are required to be passed at the TUI AG
EGM, expected to be held on or around 27 October 2014. These include
resolutions for approving the Direct Capital Increase and for approving the
Conditional Capital Increase, which must also then be registered with the
appropriate commercial registries before the Scheme can become Effective.

However, in accordance with German law, insofar as any shareholder
contestation actions (Anfechtungsklagen) are raised relating to those
resolutions, TUI AG will not be able to register the resolutions for the
Direct Capital Increase and the Conditional Capital Increase until such
actions have been concluded. The conclusion of any such actions could take
up to approximately four to seven months from the date on which the TUI AG
EGM is held and therefore result in a delay before all of the Conditions
are satisfied and, if successful, could prevent satisfaction of all the
Conditions.

Media calls

There will be conference calls for the UK and German newswires and national
media today, 15 September 2014.  The newswire calls will take place at
08.15hrs (BST), 09.15hrs (CEST). The national media calls will take place
at 11.00hrs (BST), 12.00hrs (CEST). Respective dial in details are below.

The UK media dial in details are:

UK newswire call at 08.15hrs (BST): +44 1452 555 566
UK newswire PIN code: 503 7004

UK national media call at 11.00hrs (BST): +44 1452 555 566
UK national media PIN code: 504 6416

The German media dial in details are:

German newswire call at 09.15hrs (CEST): +49 30 232 531 469 or +44 20 3147
4861 (no PIN code required for either dial in)

German national media call at 12.00hrs (CEST): +49 30 232 531 403 or +44 20
3367 9216 (no PIN code required for either dial in)

Analyst and investor briefing and webcast

A briefing and live webcast for analysts and investors will be held today,
15 September 2014, at 09.00hrs (BST), 10.00hrs (CEST) at the London Stock
Exchange, 10 Paternoster Square EC4M 7LS, United Kingdom. To access the
webcast, please go to www.tuitravelplc.com or www.tui-group.com for more
details. The presentation will be available to download from both websites
shortly before the webcast is due to start. A replay of the webcast will be
available through the respective websites shortly after it finishes.

Enquiries

TUI AG Contacts
Analysts & Investors:
Nicola Gehrt, Senior Manager Investor Relations
+49 (0) 511566-1435
Ina Klose, Manager Investor Relations
+49 (0) 511566-1318

Press:
Thomas Ellerbeck, Group Director Corporate & External Affairs
+49 (0) 511566-6000
Michael Röll, Head of Group Communications TUI AG
+49 (0) 511566-6020
Kuzey Esener, Head of Media Relations/Corporate Spokesperson
+49 (0) 511566-6024

Deutsche Bank (financial adviser and corporate broker to TUI AG):
+44 (0)20 7545 8000
Berthold Fuerst
James Ibbotson
Peter Krueger
James Agnew (Corporate Broking)

Greenhill (financial adviser to TUI AG):
+44 (0) 20 7198 7400
David Wyles
Philip Meyer-Horn
Alex Usher-Smith
TUI Travel Contacts 
Analysts & Investors:
Andy Long, Director of Strategy & Investor Relations
Tel: +44 (0)1293 645 831
Tej Randhawa, Investor Relations Manager
Tel: +44 (0)1293 645 829
Sarah Coomes, Investor Relations Manager
Tel: +44 (0)1293 645 827
 
Press:
Lesley Allan, Corporate Communications Director
Tel: +44 (0)1293 645 790
Mike Ward, External Communications Manager
Tel: +44 (0)1293 645 776
Michael Sandler / Katie Matthews (Hudson Sandler)
Tel: +44 (0)20 7796 4133

Lazard (lead financial adviser to the Independent Directors of TUI Travel):
+44 (0) 20 7187 2000
Nicholas Shott
Cyrus Kapadia
Vasco Litchfield
Aamir Khan

Bank of America Merrill Lynch (financial adviser to the Independent
Directors of TUI Travel and joint corporate broker to TUI Travel):
+44 (0) 20 7996 9777
Jonathan Bewes
Ed Peel

Barclays (financial adviser to the Independent Directors of TUI Travel and
joint corporate broker to TUI Travel):
+44 (0) 20 7623 2323
Jim Renwick
Robert Mayhew
Alex de Souza 

This summary should be read in conjunction with, and is subject to, the
full text of this announcement (including its appendices).

The Merger will be subject to the Conditions and certain terms set out in
Appendix I to this announcement and to the full terms and Conditions which
will be set out in the Scheme Document. Appendix II contains the bases and
sources of certain information used in this summary and in the full text of
this announcement. Appendix III contains details of the irrevocable
undertakings received in relation to the Merger that are referred to in
this announcement. Appendix IV contains details of and bases of belief of
anticipated quantified financial benefits relating to cost savings and cash
tax benefits arising out of the Merger. Appendix V contains details and
basis of belief of anticipated quantified financial benefit statements in
relation to the integration of Inbound Services into the Mainstream tourism
business. Appendix VI contains definitions of certain terms used in this
summary and in the full text of this announcement.

Statements of estimated cost savings and synergies relate to future actions
and circumstances which, by their nature, involve risks, uncertainties and
contingencies.  As a result, the cost savings and synergies referred to may
not be achieved, may be achieved later or sooner than estimated, or those
achieved could be materially different from those estimated.  For the
purposes of Rule 28 of the Code, quantified financial benefit statements
contained in this announcement are solely the responsibility of the New
Executive Board of TUI AG. These statements are not intended as a profit
forecast and should not be interpreted as such. Appendix IV sets out
anticipated quantified financial benefit statements relating to cost
savings and cash tax benefits arising out of the Merger and provides
underlying information and bases of belief. PwC, Deutsche Bank, Greenhill
and Lazard have each confirmed that their respective reports dated 27 June
2014 continue to apply. Appendix V includes reports from PwC, Deutsche
Bank, Greenhill and Lazard, in connection with anticipated quantified
financial benefit statements relating to the integration of Inbound
Services into the Mainstream tourism business, as required pursuant to Rule
28.1(a) of the Code, and provides underlying information and bases of
belief. Each of PwC, Deutsche Bank, Greenhill and Lazard has given and not
withdrawn its consent to the publication of its report in the form and
context in which it is included.

Statements by financial advisers

Deutsche Bank AG is authorised under German Banking Law (competent
authority: BaFIN - Federal Financial Supervisory Authority). Deutsche Bank
AG, London Branch is further authorised by the Prudential Regulation
Authority and is subject to limited regulation by the Financial Conduct
Authority and Prudential Regulation Authority. Deutsche Bank is acting as
joint financial adviser to TUI AG and no one else in connection with the
Merger or the contents of this announcement and will not be responsible to
anyone other than TUI AG for providing the protections afforded to its
clients or for providing advice in connection with the contents of this
announcement or any matter referred to herein.

Greenhill & Co. Europe LLP, which is authorised and regulated by the
Financial Conduct Authority, and is also authorised under German Banking
Law (competent authority: BaFIN - Federal Financial Supervisory Authority),
is acting as joint financial adviser to TUI AG and no one else in
connection with the Merger or the contents of this announcement and will
not be responsible to anyone other than TUI AG for providing the
protections afforded to its clients or for providing advice in connection
with the contents of this announcement or any matter referred to herein.

Lazard & Co., Limited, which is authorised and regulated in the UK by the
Financial Conduct Authority, is acting exclusively as financial adviser to
the Independent Directors of TUI Travel and no one else in connection with
the Merger and will not be responsible to anyone other than the Independent
Directors of TUI Travel for providing the protections afforded to clients
of Lazard & Co., Limited nor for providing advice in relation to the Merger
or any other matters referred to in this announcement. Neither Lazard &
Co., Limited nor any of its affiliates owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether in
contract, in tort, under statute or otherwise) to any person who is not a
client of Lazard &  Co., Limited in connection with this announcement, any
statement contained herein, the Merger or otherwise.
 
Barclays Bank PLC, acting through its investment bank, which is authorised
by the Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority, is acting
exclusively for the Independent Directors of TUI Travel and no one else in
connection with the matters described herein and will not be responsible to
anyone other than the Independent Directors of TUI Travel for providing the
protections afforded to its clients or for providing advice in relation to
the matters described in this announcement or any transaction or any other
matters referred to herein.

Merrill Lynch International, a subsidiary of Bank of America Corporation,
is acting exclusively for the Independent Directors of TUI Travel in
connection with the matters described in this announcement and for no one
else and will not be responsible to anyone other than the Independent
Directors of TUI Travel for providing the protections afforded to its
clients or for providing advice in relation to the matters described in
this announcement or any transaction or any other matters referred to
herein.

J.P. Morgan, which is authorised and regulated by the Financial Conduct
Authority in the United Kingdom, is acting exclusively for the Supervisory
Board of TUI AG as financial adviser for the purposes of providing a
fairness opinion and acting for no-one else in connection with the Merger
and will not be responsible to anyone other than the Supervisory Board of
TUI AG for providing the protections afforded to clients of J.P. Morgan nor
for providing advice in relation to the Merger or any other matter referred
to in this announcement.

Quantified Financial Benefits

No statement in the Quantified Financial Benefits Statements, or this
announcement generally, should be construed as a profit forecast or
interpreted to mean that the Combined Group's earnings in the first full
year following the Merger, or in any subsequent period, would necessarily
match or be greater than or be less than those of TUI AG and/or TUI Travel
for the relevant preceding financial period or any other period. Aside from
the one-off integration costs, no material dis-synergies (whether or not
recurring) are expected in connection with the Merger. The New Executive
Board of TUI AG consider that the identified synergies (except for the cost
savings expected to result from the reorganisation of the Mainstream
tourism business) would only accrue as a direct result of the success of
the Merger and could not be achieved independently of the Merger.

Forward-looking statements

This announcement contains statements about TUI AG, TUI Travel and the
Combined Group which are, or may be deemed to be, "forward-looking
statements" and which are prospective in nature. All statements other than
statements of historical fact included in this announcement may be
forward-looking statements. They are based on current expectations and
projections about future events, and are therefore subject to risks and
uncertainties which could cause actual results to differ materially from
the future results expressed or implied by the forward-looking statements.
Often, but not always, forward-looking statements can be identified by the
use of forward-looking words such as "plans", "expects", "is expected", "is
subject to", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", "believes", "targets", "aims", "projects", "future-proofing"
or words or terms of similar substance or the negative thereof, as well as
variations of such words and phrases or statements that certain actions,
events or results "may", "could", "should", "would", "might" or "will" be
taken, occur or be achieved. Such statements are qualified in their
entirety by the inherent risks and uncertainties surrounding future
expectations. Forward-looking statements may include statements relating to
the following: (i) future capital expenditures, expenses, revenues,
earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects; (ii) business and
management strategies and the expansion and growth of TUI AG's, TUI
Travel's or the Combined Group's operations and potential synergies
resulting from the Merger; and (iii) the effects of global economic
conditions on TUI AG's, TUI Travel's or the Combined Group's business.

Such forward-looking statements involve known and unknown risks and
uncertainties that could significantly affect expected results and are
based on certain key assumptions. Many factors may cause the actual
results, performance or achievements of TUI AG or TUI Travel to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Important factors
that could cause actual results, performance or achievements of TUI AG or
TUI Travel to differ materially from the expectations of TUI AG or TUI
Travel, as applicable, include, among other things, general business and
economic conditions globally, industry trends, competition, changes in
government and other regulation, changes in political and economic
stability, disruptions in business operations due to reorganisation
activities (whether or not TUI AG combines with TUI Travel), interest rate
and currency fluctuations, the failure to satisfy any conditions for the
Merger on a timely basis or at all, the failure to satisfy the conditions
of the Merger if and when implemented (including approvals or clearances
from regulatory and other agencies and bodies) on a timely basis or at all,
the failure of TUI AG to combine with TUI Travel on a timely basis or at
all, the inability of the Combined Group to realise successfully any
anticipated synergy benefits when the Merger is implemented, the inability
of the Combined Group to integrate successfully TUI AG's and TUI Travel's
operations and programmes when the Merger is implemented, the Combined
Group incurring and/or experiencing unanticipated costs and/or delays or
difficulties relating to the Merger when the Merger is implemented. Such
forward-looking statements should therefore be construed in light of such
factors.

Neither TUI AG nor TUI Travel, nor any of their respective associates or
directors, officers or advisers, provides any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any
forward-looking statements in this announcement will actually occur. You
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.

Other than in accordance with its legal or regulatory obligations, neither
TUI AG nor TUI Travel is under any obligation and TUI AG and TUI Travel
each expressly disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

If you are in any doubt about the contents of this announcement or the
action you should take, you are recommended to seek your own independent
personal financial advice immediately from your stockbroker, bank manager,
solicitor, accountant, fund manager or other appropriate independent
financial adviser duly authorised under the UK Financial Services and
Market Act 2000 (as amended) if you are resident in the UK or, if not, from
another appropriately authorised independent financial adviser.

No statement in this announcement is intended as a profit forecast or
estimate for any period and no statement in this announcement should be
interpreted to mean that earnings or earnings per share for TUI AG or TUI
Travel, as appropriate, for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings
per share for TUI AG or TUI Travel, as appropriate.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more
of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to
be, solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement
in which any securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests and
short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 pm (London time) on the 10th
business day following the commencement of the offer period and, if
appropriate, by no later than 3.30 pm (London time) on the 10th business
day following the announcement in which any securities exchange offeror is
first identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to the
deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in
1% or more of any class of relevant securities of the offeree company or of
any securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of
the dealing concerned and of the person's interests and short positions in,
and rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror, save to the
extent that these details have previously been disclosed under Rule 8. A
Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by
no later than 3.30 pm (London time) on the business day following the date
of the relevant dealing.

If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a securities
exchange offeror, they will be deemed to be a single person for the purpose
of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and
by any offeror and Dealing Disclosures must also be made by the offeree
company, by any offeror and by any persons acting in concert with any of
them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be
made can be found in the Disclosure Table on the Takeover Panel's website
at www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror
was first identified. You should contact the Panel's Market Surveillance
Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing Disclosure.

Further information

This announcement is for information purposes only. It is not intended to
and does not constitute, or form part of, any offer, invitation or the
solicitation of any offer to purchase, otherwise acquire, subscribe for,
sell or otherwise dispose of any securities, or the solicitation of any
vote or approval in any jurisdiction, pursuant to the Merger or otherwise
nor shall there be any sale, issuance or transfer of securities in any
jurisdiction in contravention of applicable law. The Merger will be
effected solely by means of the Scheme Document which, together with the
forms of proxy, will contain the full terms and conditions of the Merger
including details of how to vote in respect of the Merger.

TUI Travel will prepare the Scheme Document to be distributed to TUI Travel
Shareholders and TUI AG will prepare the TUI AG EGM Invitation to be
distributed to existing TUI AG Shareholders. TUI AG will also publish the
TUI AG Prospectus containing information about the New TUI AG Shares and
the Combined Group. TUI Travel urges TUI Travel Shareholders to read the
Scheme Document and the TUI AG Prospectus when they become available
because they will contain important information in relation to the Merger,
the New TUI AG Shares and the Combined Group. TUI AG urges existing TUI AG
Shareholders to read the TUI AG EGM Invitation and the TUI AG Prospectus
when they become available because they will contain important information
in relation to the Merger, the New TUI AG Shares and the Combined Group.
Any vote in respect of the Scheme, or any vote in respect of the
resolutions to be proposed at the TUI AG EGM to approve the Direct Capital
Increase, the Conditional Capital Increase and related matters, should be
made only on the basis of the information contained in the Scheme Document
and the TUI AG Prospectus, or the TUI AG EGM Invitation and the TUI AG
Prospectus, as appropriate.

This announcement has been prepared for the purposes of complying with
English law, the rules of the London Stock Exchange and the Code and the
information disclosed may not be the same as that which would have been
disclosed if this announcement had been prepared in accordance with the
laws and regulations of any jurisdiction outside the UK.

This announcement does not constitute a prospectus or prospectus equivalent
document.

Please be aware that addresses, electronic addresses and certain other
information provided by TUI Travel Shareholders, persons with information
rights and other relevant persons for the receipt of communications from
TUI Travel may be provided to TUI AG during the Offer Period as required
under Section 4 of Appendix 4 to the Code.

Notes to United States investors in TUI Travel

TUI Travel Shareholders in the United States should note that the Merger
relates to the shares of an English company and is proposed to be made by
means of a scheme of arrangement provided for under, and governed by,
English law.  Neither the proxy solicitation nor the tender offer rules
under the US Exchange Act will apply to the Scheme.  Moreover the Scheme
will be subject to the disclosure requirements and practices applicable in
the UK to schemes of arrangement, which differ from the disclosure
requirements of the US proxy solicitation rules and tender offer rules. 
Financial information included in this announcement has been or will be
prepared in accordance with accounting standards applicable in the UK and
may not be comparable to financial information of US companies or companies
whose financial statements are prepared in accordance with generally
accepted accounting principles in the United States.

TUI Travel is organised under the laws of England.  TUI AG is organised
under the laws of Germany. All of the officers and directors of TUI Travel
and TUI AG are residents of countries other than the United States. The
majority of the assets of TUI Travel and TUI AG are located outside of the
United States. As a result, it may not be possible to effect service of
process within the United States upon TUI Travel, TUI AG, or any of their
respective officers or directors, or to enforce outside the United States
judgements obtained against TUI Travel, TUI AG, or any of their respective
officers or directors in US courts, including, without limitation,
judgements based upon the civil liability provisions of the US federal
securities laws or the laws of any state or territory within the United
States. It may not be possible to sue TUI Travel and TUI AG or their
respective officers or directors in a non-US court for violations of US
securities laws.  It may be difficult to compel TUI Travel, TUI AG and
their respective affiliates to subject themselves to the jurisdiction and
judgment of a US court.

None of the securities referred to in this announcement have been approved
or disapproved by the US Securities and Exchange Commission, any state
securities commission in the United States or any other US regulatory
authority, nor have such authorities passed upon or determined the adequacy
or accuracy of the information contained in this announcement. Any
representation to the contrary is a criminal offence in the United States.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the
US Exchange Act, TUI AG or its nominees, or its brokers (acting as agents),
may from time to time make certain purchases of, or arrangements to
purchase TUI Travel Shares outside of the United States, other than
pursuant to the Merger, until the date on which the Merger becomes
effective, lapses or is otherwise withdrawn.  These purchases may occur
either in the open market at prevailing prices or in private transactions
at negotiated prices.  Any information about such purchases will be
disclosed as required in the UK and will be available from the Regulatory
Information Service of the London Stock Exchange available at
http://www.londonstockexchange.com.

Notes regarding New TUI AG Shares

The New TUI AG Shares to be issued pursuant to the Scheme have not been and
will not be registered under the US Securities Act or under the relevant
securities laws of any state or territory or other jurisdiction of the
United States or the relevant securities laws of Japan and the relevant
clearances have not been, and will not be, obtained from the securities
commission of any province of Canada.  No prospectus in relation to the New
TUI AG Shares has been, or will be, lodged with, or registered by, the
Australian Securities and Investments Commission.

The New TUI AG Shares will be issued in reliance upon the exemption from
the registration requirements of the US Securities Act provided by section
3(a)(10) thereof. For the purpose of qualifying for the exemption from the
registration requirements of the US Securities Act provided by section
3(a)(10) thereof with respect to the New TUI AG Shares issued pursuant to
the Scheme, TUI Travel will advise the Court that its sanctioning of the
Scheme will be relied upon by TUI AG as an approval of the Scheme following
a hearing on its fairness to TUI Travel at which hearing all TUI Travel
shareholders are entitled to attend in person or through counsel to support
or oppose the sanctioning of the Scheme and with respect to which
notification has been given to all such shareholders. Neither the SEC nor
any US state securities commission has reviewed or approved this document,
the Scheme, or the issue of the New TUI AG Shares, and any representation
to the contrary is a criminal offence in the United States. Accordingly,
the New TUI AG Shares are not being, and may not be, offered, sold, resold,
delivered or distributed, directly or indirectly in or into any Restricted
Jurisdiction if to do so would constitute a violation of relevant laws of,
or would require registration thereof in, such jurisdiction (except
pursuant to an exemption, if available, from any applicable registration
requirements or otherwise in compliance with all applicable laws).

Publication on websites and availability of hard copies

A copy of this announcement will be available, subject to certain
restrictions relating to persons resident in Restricted Jurisdictions, for
inspection on TUI Travel's website at www.tuitravelplc.com and on TUI AG's
website at www.tui-group.com by no later than 12 noon (London time) on the
Business Day following the date of this announcement. For the avoidance of
doubt, save as expressly referred to in this announcement, the contents of
those websites are not incorporated, and do not form part of, this
announcement.

TUI Travel Shareholders may request a hard copy of this announcement by
contacting TUI Travel Investor Relations during business hours on +44 (0)
1293 645 831 or by submitting a request in writing to TUI Travel Investor
Relations at TUI Travel's Head Office at TUI Travel House, Fleming Way,
Crawley Business Quarter, Crawley, West Sussex RH10 9QL. Existing TUI AG
Shareholders may request a hard copy of this announcement by contacting TUI
Investor Relations during business hours on +49 511 566 1425 or by
submitting a request in writing to TUI AG Investor Relations at TUI AG's
Head Office at Karl-Wiechert-Allee 4, 30625 Hanover, Germany. TUI Travel
Shareholders and existing TUI AG Shareholders may also request that all
future documents, announcements and information to be sent to them in
relation to the Merger should be in hard copy form.

Rounding

Certain figures included in this announcement have been subjected to
rounding adjustments. Accordingly, figures shown for the same category
presented in different tables may vary slightly and figures shown as totals
in certain tables may not be an arithmetic aggregation of the figures that
precede them.
 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR
INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION
OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THE FOLLOWING ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND TUI
TRAVEL SHAREHOLDERS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO
THE NEW TUI AG SHARES EXCEPT ON THE BASIS OF THE INFORMATION IN THE SCHEME
DOCUMENT AND THE TUI AG PROSPECTUS WHICH ARE PROPOSED TO BE PUBLISHED IN
DUE COURSE

FOR IMMEDIATE RELEASE

15 SEPTEMBER 2014

RECOMMENDED ALL-SHARE MERGER OF TUI TRAVEL PLC AND TUI AG

                         1. Introduction

Further to the announcements made by TUI Travel and TUI AG on 27 June 2014
and 25 July 2014, the Independent Directors of TUI Travel and the Executive
Board (Vorstand) of TUI AG are pleased to announce that they have reached
agreement on the terms of a recommended all-share nil-premium merger of TUI
Travel and TUI AG. The Merger is to be implemented by way of a UK
Court-sanctioned scheme of arrangement of TUI Travel, involving TUI AG
issuing New TUI AG Shares as consideration.

Upon Completion, the enlarged share capital of TUI AG will be admitted to
listing on the premium segment of the Official List of the UK Listing
Authority and admitted to trading on the main market of the London Stock
Exchange. The Combined Group will seek inclusion in the FTSE UK Index
Series (including FTSE 100).

The Merger will result in the creation of the world's number one integrated
leisure tourism business, clearly positioned as a fully
vertically-integrated tour operator with enhanced long-term growth
prospects.

                         2. The Merger

Under the Merger, which will be subject to the Conditions and terms set out
in Appendix I to this announcement and to the further terms to be set out
in the Scheme Document, TUI Travel Shareholders (other than TUI AG and
certain connected parties) will receive:

0.399 New TUI AG Shares in exchange for each TUI Travel Share held by them
at the Scheme Record Time

Taking into consideration TUI AG's existing stake in TUI Travel, the Merger
is expected to result in TUI Travel Shareholders (other than TUI AG and
certain connected parties) owning 46% of the Combined Group and existing
TUI AG Shareholders owning 54% of the Combined Group, on a fully diluted
basis.

Based on the Exchange Ratio and the closing share prices as at 12 September
2014 (being the last practicable date prior to the release of this
announcement), the Combined Group would have a fully-diluted equity value
of approximately EUR6.5 billion (£5.2 billion).

                         3. Background to and reasons for the Merger

TUI AG owns the most recognised travel brand in Europe. With over 230
hotels and more than 155,000 beds, it is Europe's largest holiday hotelier.
With seven ships, its cruise operation is one of Europe's most successful.
Having rationalised its businesses through "one TUI", it has ambitious
growth plans to double the size of its content.

TUI Travel is one of Europe's leading leisure tourism groups and operates
as a single organisation with a portfolio of tour operator brands servicing
more than 30 million customers. Having differentiated itself from the rest
of the industry, its growth is focused on the continued development of
Unique Holidays, which are available exclusively through its brands,
distributed directly through its own channels with significant numbers of
its customers flying on its modern holiday airline fleet.

The Merger would bring together the content portfolio of hotels and cruise
ships of TUI AG with access to customers through the distribution
capability and Unique Holiday concepts of TUI Travel. It will create a pure
play fully-integrated leisure tourism group that is a global leader,
capable of covering each level of the value chain which allows delivery of
a complete end-to-end customer experience with access to Unique Holiday
content.

Reasons for the Merger

(a) Accelerate growth and future-proof the vertically integrated business
    model

(i)  Opportunity to accelerate long-term growth of the Combined Group by
    accessing high-quality content on an exclusive basis

The Merger will strengthen and future-proof the Combined Group's fully
vertically-integrated business model by securing access to hotel and cruise
ship content on an exclusive basis for its Mainstream customers.
Approximately 15% of TUI Travel's total existing Mainstream hotel content
is currently provided by TUI AG, with the remainder supplied through its
own hotels and resorts division (10%) and third parties (75%).

Enhances certainty of supply for the continued growth of Unique Holidays

Unique Holidays, which can only be bought or are only available from TUI
Travel, are fundamental to the business' current success and would remain
central to the strategy of the Combined Group (outlined in section 4
below). Unique Holidays provide a superior customer offering and
competitive advantage versus the commodity competition, through an earlier
booking profile and higher levels of customer satisfaction and retention.
Approximately 30% of Mainstream's Unique Holiday content is already
supplied by TUI Travel and TUI AG hotels. TUI Travel currently targets a
proportion of Unique Holidays of 76% by the financial year 2016/17, and
plans to grow its core Unique Holidays offering by approximately 60 hotels
by the financial year 2018/19. The Merger would provide certainty of supply
for the continued growth of Unique Holidays.

(ii)  Enhances and de-risks Mainstream content growth as a result of
    integration

Further vertical integration means that the Combined Group will have a
single view of the customer and will therefore be able to develop the right
content to fulfil customer desires. It will also be able to develop new
properties more quickly in the knowledge that these properties will have
direct access to TUI Travel's customers as potential guests, and with
higher levels of utilisation. The opportunities for de-risked growth - on a
global scale - are potentially very significant.

TUI AG currently plans to add more than 30 new hotels and two new cruise
ships to its current portfolio by the financial year 2018/19. The Merger
provides the potential for the Combined Group to double the pace of
existing TUI AG content growth through further vertical integration, with
more than 30 additional hotels and up to two additional new cruise ships.
Historic annual performance suggests a potential contribution to EBITA of
EUR1.4 million (£1.1 million) per hotel and a substantial contribution per
ship (under the TUI Cruises business model) (see endnote 9) . It is
expected that the
acceleration of content growth will drive customer and top-line growth for
the Combined Group.

These developments will also enable the Combined Group to attract
additional unique content externally, since content providers want to be
associated with a winning distribution model, thereby creating a virtuous
circle. This will also help to ensure an optimal mix of owned, joint
venture, managed and third-party hotels.

(iii) Reinforces the Combined Group's competitive advantage versus
    non-integrated leisure travel businesses through further control over
    the end-to-end customer experience

TUI Travel already operates as a vertically-integrated tour operator,
enabling interaction with the customer throughout their holiday experience.
This has given the business a competitive advantage versus its
non-vertically integrated competitors, such as online travel agents and
low-cost carriers, who have a more limited relationship with the customer.
Further vertical integration will strengthen this competitive advantage
covering the whole holiday experience value chain for customers from
research and booking, including pre-trip arrangement, to on-holiday
experience and journey, as well as after holiday services.

In summary, the Merger is expected to deliver material value to all TUI
Travel Shareholders and existing TUI AG Shareholders, with a continuation
of strong leadership.

(b) Deliver significant synergies, increased occupancy and cost savings

Accelerated growth is the key driver for the proposed combination of TUI AG
and TUI Travel through the Merger. However, significant financial benefits
are expected in a number of areas as a result of combining the two
businesses and focusing on the Mainstream tourism business. The New
Executive Board of TUI AG believes that the principal sources of financial
benefits will be as set out below.

For the avoidance of doubt, the (i) corporate streamlining; (ii) cash tax
benefits and (iii) integration of Inbound Services into the Mainstream
tourism business outlined below comprise the Quantified Financial Benefits
Statements and should be read in conjunction with Appendix I to the
announcement made by TUI Travel and TUI AG on 27 June 2014 and Appendices
IV and V to this announcement, which include further details including the
key assumptions underlying the potential synergies and cost savings.

As a direct result of the Merger, the New Executive Board of TUI AG
believes that the following benefits will arise:

(i) Corporate streamlining

  - Recurring cost savings of at least EUR45 million (£36 million) per
    annum from corporate streamlining as a direct result of the Merger.
    These savings are expected to be achieved progressively from Completion
    onwards and be realised in full by the third full financial year
    following Completion.

  - The major components of the proposed corporate streamlining are cost
    savings expected to arise from the consolidation of overlapping
    functions (which are expected to represent more than half of these
    corporate streamlining cost savings), and the costs that would be saved
    from moving from a structure with two separate stock market listings to
    one. Estimated one-off cash costs for integration of approximately
    EUR45 million (£36 million) are expected to be incurred to achieve
    these savings.

(ii) Cash tax benefits

  - Recurring cash tax benefits resulting from a unified ownership
    structure enabling the use of carried forward tax losses and a more
    efficient tax grouping.

  - Based on the Combined Group's tax calculations for the financial year
    2012/13, a cash tax benefit of EUR35 million (£28 million) would have
    been achieved had the two businesses been combined in that year.(see
endnote 10)

  - For the financial year 2012/13, this cash tax benefit would have
    effectively resulted in a decrease in the underlying effective tax rate
    of the Combined Group of around 7 percentage points from 31% to around
    24%. (see endnote 11)

In addition to the benefits arising as a result of the Merger outlined
above, the following net benefits have been identified by the New Executive
Board of TUI AG. These net benefits could have been achieved independently
of the Merger but the Combined Group's strategy now provides an opportunity
to optimise the Combined Group's operating structure and achieve these
benefits.

  - Integration of Inbound Services into the Mainstream tourism business

  - As a consequence of the strategic decision to operate the current
    Online Accommodation businesses and Specialist & Activity sector of TUI
    Travel separately from the Mainstream tourism business, additional cost
    savings have been identified:

      - Recurring net cost savings of at least EUR20 million (£16 million)
        per annum have been identified as further described below:

          - These cost savings mainly comprise savings from the
            consolidation of overlapping functions, property costs and
            travel expenses.

          - At least EUR30 million (£24 million) of cost savings are
            expected to arise as the Mainstream tourism business
            reorganises and takes over the management of the Inbound
            Services business related to Mainstream.

          - These savings are expected to be achieved progressively from
            Completion onwards and be realised in full at the end of the
            third full financial year following Completion.

          - As a further consequence of this proposed reorganisation, over
            time it will become unprofitable to continue certain third
            party commercial agreements with a consequential recurring loss
            of gross margin of EUR10 million (£8 million) per annum.

  - Estimated one-off cash costs of approximately EUR76 million (£61
    million) are expected to be incurred to achieve these savings, which
    includes EUR19 million (£15 million) of capital gains tax from the
    proposed corporate restructuring and indirect taxes.

The information in paragraph (iii) above on the net benefits should be read
in conjunction with Appendix V which includes further details including the
key assumptions underlying the net benefits and the bases of belief,
together with opinions from PwC, Lazard, Deutsche Bank and Greenhill.

As a direct result of the Merger, in addition to the Quantified Financial
Benefits outlined above, the New Executive Board of TUI AG believes the
Merger could create additional commercial benefits and growth opportunities
as follows:

  - Increased occupancy from vertical integration

  - A significant increase in occupancy levels will be achievable following
    the Merger through joint yield management of content.  This will drive
    further profit improvement.

  - To illustrate the impact of vertical integration on occupancy levels,
    following TUI Travel's acquisition from TUI AG of the Magic Life clubs
    in July 2011, the ability for TUI Travel to secure the supply of an
    attractive, differentiated high-quality hotel club product helped
    increase occupancy across the Magic Life portfolio from 77% in
    financial year 2010/11 to a booking level of 85% in the current
    financial year 2013/14.(see endnote 12)

  - In the financial year 2012/13, TUI AG reported an average occupancy
    level of 80% across its hotel and resort portfolio.

  - Based on internal TUI AG calculations, each 1 percentage point increase
    in occupancy levels in that year would have resulted in approximately
    EUR6.1 million (£4.9 million) of additional EBITA. (see endnote 13)

  - Simplification of group structure to unlock value

  - The New Executive Board of TUI AG is confident that value creation for
    both sets of shareholders should result from the creation of a pure
    play integrated leisure tourism business and from the elimination of
    the current TUI AG structural discount.

                         4. Strategy of the Combined Group

The Combined Group will utilise the scale of its fully-integrated
Mainstream tourism business - content, Unique Holiday experiences and
distribution - whilst driving growth and value from its non-Mainstream
businesses, to enhance its growth and margin profile, thereby
future-proofing its long-term sustainable competitive position.

(a) Deliver a superior end-to-end customer experience through our
fully-integrated Mainstream tourism business

Our Mainstream business will focus on broadening its customer offerings,
exploiting its brands and implementing its unique proposition across much
of the Combined Group's hotel portfolio, providing a superior experience
for its customers. The resources available to the Combined Group will
enable an acceleration of the development of new content, driving and
broadening the range of Unique Holiday experiences that TUI Travel can
deliver to new customers, thereby enhancing the Combined Group's top-line
growth.

A complete end-to-end customer approach will be developed offering unique,
high-quality content from the strongest brands in tourism covering the
whole holiday experience value chain for customers. Customers will be able
to book "anything, anytime, anywhere, any way". The New Executive Board of
TUI AG expects this to drive growth through repeat customer business,
building loyalty, retention and increased, long-term sustainable profit
growth.

Key to implementing this strategy is operating effectively in a digital
age. Single solutions developed and deployed to many will reduce long-term
infrastructure costs. As a result, the Combined Group expects it will be
able to focus cash utilisation to accelerate the development of TUI
Travel's existing digital platforms across the whole holiday cycle with
two-way interaction - from suggestion, to research, to booking, travelling
to the holiday, while on holiday, sharing the holiday experience with
friends and family and returning home to the suggestion for the next
leisure travel experience from the Combined Group. Personal interaction on
the ground at home, in the air and in the resort will provide considerable
added-value expertise.

The Mainstream tourism business recorded revenue of £13,426 million
(EUR16,829 million) (excluding Inbound Services) and EBITA (excluding
central costs but including Inbound Services) of £706 million (EUR885
million) in the financial year 2012/13. (see endnote 14)

(b) Accelerate long-term growth supported by an asset-right business model
based on an optimal mix of owned and managed hotels and cruise ships with a
targeted minimum return on capital of 15% for new content (see endnote 15)

The Combined Group intends to support long-term growth through the
operation of a flexible, asset-right business model. In order to operate
more efficiently and maximise the value of its assets, the Combined Group
will continue to optimise the ownership structure of existing and new
hotels and cruise ships, targeting a minimum return on capital of 15% for
all new content.

It will aim to optimise the investment and refinancing needs, if any, of
such new assets and it may also decide to operate them through existing or
new joint venture structures. In this context, it is expected that less
than 50% of the accelerated growth hotels mentioned in paragraph 3(a)(ii)
of this announcement would be owned (either via a subsidiary or joint
venture) and that the additional two cruise ships mentioned in the same
section would be owned by TUI Cruises with approximately 80% debt, 20%
equity finance.

As of financial year 2012/13, approximately 50% of the more than 230 hotels
and resorts within TUI AG Hotels & Resorts were operated under management
contracts, approximately 9% were leased or franchised and the remainder
were owned. In total, this represented an invested capital of approximately
EUR1.9 billion (£1.5 billion) for its hotels and resorts portfolio.

(c) Deliver synergies, cost savings and commercial benefits with the
potential to unlock  further value

As detailed above, the Merger is expected to deliver EUR45 million (£36
million) of annual synergies through corporate streamlining and recurring
cash tax benefits, which based on the Combined Group's tax calculations for
the financial year 2012/13 would have achieved a benefit of EUR35 million
(£28 million) in that financial year had the two businesses been combined.
(see endnote 16)

In addition, the integration of Inbound Services into the Mainstream
tourism business is expected to deliver annual net cost savings of EUR20
million (£16 million).

It is also expected that the Merger will result in material commercial
benefits from increased occupancy, vertical integration and additional
growth opportunities from an accelerated and broadened content portfolio.

(d) Maximise the growth and value of the Online Accommodation and
Specialist & Activity businesses

Following the Merger, the current Online Accommodation businesses and
Specialist & Activity sector of TUI Travel will operate separately from the
Mainstream tourism business, under the direct dedicated leadership of
William Waggott. These businesses have a different business model to
Mainstream, therefore managing them separately will enable the Combined
Group to focus more effectively on maximising their growth and value.

The Online Accommodation business recorded total transaction value of £2.1
billion (EUR2.6 billion) and EBITA of £40 million (EUR50 million) in the
financial year 2012/13. The Specialist & Activity sector recorded revenue
of £1,433 million (EUR1,796 million) and EBITA of £41 million (EUR51
million) in the same period.

(e) Treat the TUI AG stake in Hapag-Lloyd AG as a business for disposal

The stake in Hapag-Lloyd AG is currently held by TUI AG, and following
Completion will continue to be held by the Combined Group, as a business
for disposal, in order to finalise the Combined Group's exit from Container
Shipping. This does not include Hapag-Lloyd Kreuzfahrten, which will be
retained within the Combined Group.

(f) Focus on balance sheet strength, flexibility and strong free cash flow
generation with a view to increasing shareholder returns

TUI Travel and TUI AG already have clearly stated strategic goals to
improve free cash flow and therefore deliver superior returns on investment
for shareholders. The Merger will align these goals, with the aim of
creating a strong, flexible balance sheet and enhanced cash flow
generation.

The Merger is expected to be EPS accretive (see endnote 17)  for both sets
of shareholders
from the first full financial year post-Merger (see endnote 18) (with
strong EPS accretion
for TUI Travel Shareholders).  Strong EPS accretion for both sets of
shareholders is expected thereafter. In parallel, a strong cash
flow/dividend benefit for TUI AG Shareholders will be delivered from the
first full financial year post-Merger. 

                         5. Management, headquarters, employees and
                            corporate governance

  - Supervisory Board and Chairmanship

The members of the Supervisory Board of TUI AG representing the
shareholders will be drawn in equal number from both TUI AG and TUI Travel.
The Supervisory Board of TUI AG will be chaired by Prof. Dr Klaus Mangold
and Sir Michael Hodgkinson will be co-Vice Chairman along with Frank Jakobi
as representative of the employees.

At the TUI AG EGM, TUI AG will propose to its shareholders to increase the
members of the Supervisory Board of TUI AG from 16 to 20. Subject to the
approval of this increase, the Supervisory Board of TUI AG will comprise
ten members representing the shareholders and ten employee representatives.

Prof. Dr Klaus Mangold's term as Chairman of the Supervisory Board of TUI
AG will end at the Annual General Meeting of TUI AG in February 2016 and he
will then retire.

At that February 2016 Annual General Meeting, Peter Long will then, on the
proposal of the Supervisory Board, be suggested for approval by TUI AG
Shareholders as a member of the Supervisory Board of TUI AG for a five year
term.

Under applicable German rules, in order for Peter Long to move directly
from the Executive Board of TUI AG to the Supervisory Board of TUI AG, his
suggestion as a member of the Supervisory Board of TUI AG at the February
2016 Annual General Meeting must be proposed by TUI AG Shareholders holding
more than 25% of the shares in TUI AG at that time.

It is planned that, following his appointment to the Supervisory Board of
TUI AG, the Supervisory Board of TUI AG would elect Peter Long as its
Chairman in place of the retiring Prof. Dr Klaus Mangold.

The Supervisory Board of TUI AG will use all reasonable endeavours, to the
extent legally permissible, to achieve the above succession and TUI AG will
inform its shareholders at the TUI AG EGM in 2014 about Peter Long's future
position.

TUI AG's largest two shareholders, Mr. Alexey Mordashov and Riu Hotels S.A.
have each declared that they intend to support such proposal at the
February 2016 Annual General Meeting.

For a limited period of two years, the Supervisory Board of TUI AG would
have an Integration Committee, initially chaired by Prof. Dr Klaus Mangold
and co-chaired by Sir Michael Hodgkinson. The main responsibilities of this
committee would be the monitoring of the Merger and its implementation. The
committee would advise the New Executive Board of TUI AG as a whole and
would not have decision-making power.

(b) Senior Management

Peter Long and Friedrich Joussen will become joint Chief Executives of the
Combined Group on Completion until Peter Long's accession to the
Supervisory Board of TUI AG becomes effective. Friedrich Joussen will lead
the Combined Group as sole CEO following Peter Long's accession to the
Supervisory Board of TUI AG, which is anticipated to be in February 2016.
Until this date they will alternate in chairing the meetings of the
Executive Board of TUI AG.

Following Completion, it has been decided that the Combined Group will be
best served by Peter Long continuing to have responsibility for the former
TUI Travel businesses (Mainstream, Online Accommodation and Specialist &
Activity) and with a mandate to work closely with Friedrich Joussen to
ensure a smooth transition and hand-over. Friedrich Joussen will also
continue to have responsibility for TUI AG's hotels and cruises content
platforms and the co-CEOs will have joint responsibility for achieving the
envisaged synergy benefits from the Merger.

The New Executive Board of TUI AG will have a balanced number of members
drawn from TUI AG and TUI Travel. Apart from Peter Long and Friedrich
Joussen, it will further comprise:
 
From TUI Travel

  - Johan Lundgren - Deputy Combined Group CEO leading all Mainstream
    markets

  - William Waggott - CEO of Online Accommodation businesses and Specialist
    & Activity sector focusing on managing these businesses separately for
    growth and value

From TUI AG

  - Horst Baier - Combined Group CFO

  - Sebastian Ebel - HR/Arbeitsdirektor and in parallel responsible for all
    Combined Group platforms and processes - including hotels and resorts,
    cruises and IT

The Supervisory Board of TUI AG has approved all of the new envisaged
appointments to the New Executive Board of TUI AG subject to Completion
having taken place.

(c) Headquarters, employees and corporate governance

The Combined Group will be incorporated and headquartered in Germany and
will retain a two-tier board structure. The Combined Group and operational
management will continue to be located in multiple locations as the
Combined Group continues to draw on the expertise across its markets and
the Combined Group will endeavour to optimally utilise the existing talent
in both companies.

The Independent Directors of TUI Travel and the Executive Board of TUI AG
recognise that in order to achieve the expected benefits of the Merger,
operational and administrative restructuring will be required following
Completion.

TUI AG has given assurances that, following Completion, the existing
employment rights of TUI Travel's and TUI AG's employees, including
pensions, will be fully safeguarded.

The Combined Group intends to adhere to both the UK Corporate Governance
Code and the German Corporate Governance Code to the extent practicable.
Following the Merger, the Combined Group will be subject to the shared
jurisdiction of the UK Takeover Code and applicable German takeover law.

                         6. Financing

Credit facility agreements have been entered into regarding new credit
facilities for the Combined Group, in an aggregate amount of EUR1.55
billion. These facilities comprise a EUR375 million revolving credit
facility with a maturity of three years and nine months and a backstop
facility of EUR1.175 billion with a maturity of up to two years, in each
case from the date of their signing. These facilities will provide
available financing for the Combined Group's general corporate and working
capital requirements from Completion, replacing TUI Travel's existing
revolving credit facility. It is intended that EUR1.175 billion backstop
facility will be refinanced shortly after this announcement by increasing
the commitments of the EUR375 million revolving credit facility to EUR1.55
billion (including bonding facilities in an aggregate amount of EUR250
million).

In addition, a credit facility agreement has been entered into for a EUR600
million term loan facility available at Completion which is intended to be
refinanced by the issue of senior unsecured notes shortly after this
announcement.

Each of the above facilities have been arranged by Citigroup Global Markets
Limited, J.P. Morgan Limited and UniCredit Bank AG.

TUI Travel is in the process of securing financing agreements for an amount
of US$745.5 million (£459.3 million), to be signed ahead of the publication
of the TUI AG Prospectus, in respect of a number of committed aircraft
purchases.

                         7. Dividends, dividend policy and taxation of
                            dividends

The Combined Group will benefit from balance sheet strength, flexibility
and strong free cash flow generation.

The TUI Travel interim dividend of 4.05 pence per TUI Travel Share
previously announced by TUI Travel will become payable on 3 October 2014.

In addition, TUI Travel will, immediately prior to Completion, declare and
pay a second interim dividend of 20.5 pence per TUI Travel Share, to
include 10.5 pence per TUI Travel Share in lieu of a final dividend for the
financial year 2013/14. This second interim dividend will be payable to
those TUI Travel Shareholders on the register of members of TUI Travel at
the Scheme Record Time and will be paid prior to Completion conditional on
the Court Order having been granted at the Scheme Court Hearing.

TUI Travel Shareholders will not be eligible for any final dividend paid by
TUI AG for the financial year 2013/14.  TUI AG anticipates that it will
declare a final dividend for the financial year 2013/14 (subject to
adequate balance sheet capacity, recommendations by the Executive Board of
TUI AG and the Supervisory Board of TUI AG and approval at the TUI AG
Annual General Meeting in 2015) of EUR0.33 per TUI AG Share.  The
anticipated dividend of TUI AG would represent an equivalent amount to the
originally anticipated final dividend of 10.5 pence per TUI Travel Share,
reflecting the agreed Exchange Ratio (which already takes account of the
4.05 pence TUI Travel interim dividend). The TUI AG dividend for the
financial year 2013/14 will be paid after the TUI AG Annual General Meeting
in 2015 to TUI AG Shareholders (other than holders of New TUI AG Shares).

TUI AG and TUI Travel each confirm that neither of them will make any
distribution to their shareholders, other than the aforementioned
dividends, either in respect of the financial year 2013/14 or before
Completion.

Following Completion, the Combined Group intends to adopt a dividend policy
in line with TUI Travel's present progressive dividend policy under which
dividends grow broadly in line with earnings. Provided the performance of
the Combined Group develops in line with expectations, the Combined Group
will target an increase in its dividend per share for the financial years
2014/15 and 2015/16 of 10% in excess of the underlying growth in the
Combined Group's earnings per share.  This is subject to adequate balance
sheet capacity, recommendations by the Executive Board of TUI AG and the
Supervisory Board of TUI AG and approval at the respective TUI AG Annual
General Meeting in the relevant year.

Generally, under German tax law, upon a distribution of dividends by TUI
AG, withholding tax at a total rate of 26.375% (Kapitalertragsteuer of 25%,
plus a 5.5% solidarity surcharge thereon) of the gross dividend will be
withheld. For dividend distributions to TUI AG Shareholders who are not
resident for tax purposes in Germany, the withholding rate may be reduced
in certain circumstances.  In such circumstances the withholding tax is
reduced through the German tax authority refunding to such TUI AG
Shareholders not resident for tax purposes in Germany the difference
between the total amount withheld and the maximum amount permitted to be
withheld under the applicable double tax treaty (generally 15% in the case
of the treaty between Germany and the UK) upon application to the German
tax authority.

Shareholders who are individuals and resident for tax purposes in the UK
will, in general, be subject to UK income tax on the gross amount of the
dividends paid on the TUI AG Shares rather than on the amount actually
received net of any German withholding tax. German withholding tax (net of
any refund) may be available for credit against UK income tax payable by
shareholders who are individuals and resident for tax purposes in the UK.

Corporate shareholders who are resident for tax purposes in the UK will, in
general, be exempt from UK corporation tax in respect of any dividends paid
on the TUI AG Shares held by them. Where a UK tax resident corporate
shareholder is exempt from UK corporation tax in respect of the dividends
paid on the TUI AG shares, credit for the German WHT (net of any refund)
will not be available for UK corporation tax purposes.

Further details of the taxation consequences of the Merger and of holdings
of TUI AG Shares will be set out in the Scheme Document. (see endnote 19)

                         8. Current Trading

There has been no material change in current trading performance for either
TUI Travel or TUI AG since their respective third quarter results
announcements on 8 August 2014 and 14 August 2014.

                         9. Recommendations

The Independent Directors of TUI Travel, who have been so advised by
Lazard, consider the terms of the Merger to be fair and reasonable. In
providing its advice, Lazard has taken into account the commercial
assessments of the Independent Directors of TUI Travel. Accordingly, the
Independent Directors of TUI Travel intend unanimously to recommend TUI
Travel Shareholders to vote in favour of the Scheme at the TUI Travel Court
Meeting and the resolutions to be proposed at the TUI Travel General
Meeting, as the Independent Directors of TUI Travel who hold or are
beneficially entitled to TUI Travel Shares have irrevocably undertaken to
do in respect of their own beneficial holdings of 1,135,168 TUI Travel
Shares representing in aggregate approximately 0.100% of TUI Travel's
ordinary share capital in issue on 12 September 2014 (being the last
practicable date prior to the release of this announcement).  Bank of
America Merrill Lynch and Barclays have also provided financial advice to
the Independent Directors of TUI Travel in respect of the Merger.

Peter Long is a director and Chief Executive of TUI Travel and is also a
member of the Executive Board of TUI AG. As such, Peter Long is not
considered to be an Independent Director of TUI Travel for the purposes of
TUI Travel's discussion of, or decisions in relation to, the Merger and has
not been involved in or voted on such decisions. Similarly, Peter Long has
not participated in decisions in relation to the Merger by the Executive
Board of TUI AG.  Accordingly, Peter Long has not participated in the
formal recommendation of the Merger by the Independent Directors of TUI
Travel or the Executive Board of TUI AG contained in this announcement.
Peter Long's comment on the Merger is set out above.

Also, as set out above, TUI AG has received an irrevocable undertaking to
vote in favour of the Merger at the relevant TUI Travel shareholder
meetings from Peter Long, his family and related trusts, who hold or are
beneficially entitled to TUI Travel Shares, representing in aggregate
approximately 0.267% of TUI Travel's ordinary share capital in issue on 12
September 2014 (being the last practicable date prior to the release of
this announcement. Peter Long, his families and related trusts have no
current interests in TUI AG Shares.

Friedrich Joussen, Horst Baier and Sebastian Ebel, who are directors of TUI
Travel are either members of the Executive Board of TUI AG or members of
TUI AG's senior management. As such, they are not considered to be
Independent Directors of TUI Travel for the purposes of TUI Travel's
discussion of, or decisions in relation to, the Merger and have not
participated in such discussions or voted on such decisions. Neither they
nor their family and related trusts hold any interests in TUI Travel
Shares.

The Executive Board of TUI AG (other than Peter Long who has recused
himself as set out above) considers the Merger to be in the interests of
existing TUI AG Shareholders.  The Executive Board of TUI AG (other than
Peter Long) has been advised by Deutsche Bank and Greenhill in relation to
the Merger. In providing their advice, Deutsche Bank and Greenhill have
taken into account the commercial assessments of the Executive Board of TUI
AG (other than Peter Long).

Accordingly, the Executive Board of TUI AG (other than Peter Long) intend
unanimously to recommend existing TUI AG Shareholders to vote in favour of
all of the resolutions to be proposed at the TUI AG EGM to approve the
Direct Capital Increase, the Conditional Capital Increase and related
matters, as the members of the Executive Board of TUI AG (other than Peter
Long) who hold or are beneficially entitled to TUI AG Shares intend to do
in respect of their own beneficial holdings of 158,798 TUI AG Shares
representing in aggregate approximately 0.055% of TUI AG's share capital in
issue on 12 September 2014 (being the last practicable date prior to the
release of this announcement).

The Supervisory Board of TUI AG intends unanimously to recommend existing
TUI AG Shareholders to vote in favour of all of the resolutions to be
proposed at the TUI AG EGM to approve the Direct Capital Increase, the
Conditional Capital Increase and related matters, as the members of the
Supervisory Board of TUI AG who hold or are beneficially entitled to TUI AG
Shares intend to do in respect of their own beneficial holdings of 27,955
TUI AG Shares representing in aggregate approximately 0.010% of TUI AG's
share capital in issue on 12 September 2014 (being the last practicable
date prior to the release of this announcement). The Supervisory Board of
TUI AG has obtained an additional separate fairness opinion from J.P.
Morgan with respect to the Exchange Ratio.

                        10. Director irrevocables

TUI AG has received irrevocable undertakings to vote in favour of the
Merger from the Independent Directors of TUI Travel listed in Appendix III,
their families and related trusts, who hold or are beneficially entitled to
TUI Travel Shares, representing in aggregate approximately 0.100% of TUI
Travel's ordinary share capital in issue on 12 September 2014 (being the
last practicable date prior to the release of this announcement).

TUI AG has received an irrevocable undertaking to vote in favour of the
Merger at the relevant TUI Travel shareholder meetings from Peter Long, his
family and related trusts, who hold or are beneficially entitled to TUI
Travel Shares, representing in aggregate approximately 0.267% of TUI
Travel's ordinary share capital in issue on 12 September 2014 (being the
last practicable date prior to the release of this announcement).

Those directors of TUI Travel who are not listed in Appendix III do not
have interests in TUI Travel Shares and neither do their respective
families and related trusts.

Further details of the irrevocable undertakings in relation to the Merger
are set out in Appendix III to this announcement.

Mr. Alexey Mordashov, TUI AG's largest shareholder, has confirmed his
support for the Merger.

                        11. Structure of the Merger

It is intended that the Merger will be implemented by way of a
Court-sanctioned Scheme of Arrangement between TUI Travel and the TUI
Travel Scheme Shareholders under Part 26 of the UK Companies Act.

The purpose of the Scheme is to provide for TUI AG to become the holder of
the entire issued and to be issued ordinary share capital of TUI Travel not
already owned or controlled by TUI AG and certain connected parties. This
is to be achieved by the cancellation of the TUI Travel Scheme Shares held
by TUI Travel Scheme Shareholders involving a reduction of capital, with
the reserve arising from such cancellation being used to pay up in full
such number of New TUI Travel Shares as is equal to the number of TUI
Travel Scheme Shares cancelled, which will be issued to TUI AG. In
consideration, the TUI Travel Scheme Shareholders will receive
consideration in the form of entitlements to New TUI AG Shares on the basis
set out in paragraph 2 above and paragraph 18 below.  Following Completion,
TUI Travel will be a wholly-owned subsidiary of TUI AG.
 
The Merger will be subject to the Conditions and certain terms set out in
Appendix I to this announcement and to the full terms and Conditions which
will be set out in the Scheme Document. The Scheme requires the sanction of
the Court.

The Scheme will only become Effective if, amongst other things, the
following events occur on or before 30 September 2015 (or such later date
as TUI AG and TUI Travel may, with the consent of the Panel (if required),
agree and the Court may allow):

(a) a resolution to approve the Scheme being passed by a majority in number
of TUI Travel Scheme Shareholders who are on the register of members of TUI
Travel at the Voting Record Time and who are present and voting (and
entitled to vote) at the TUI Travel Court Meeting, either in person or by
proxy, and who represent not less than 75% in nominal value of the TUI
Travel Scheme Shares held by those TUI Travel Scheme Shareholders. Excluded
Shares will not be eligible to be voted at the TUI Travel Court Meeting;

(b) the Special Resolution required to approve the Reduction of Capital,
the alteration of the TUI Travel Articles and such other matters as may be
necessary to implement the Scheme being duly passed by the requisite
majorities of TUI Travel Shareholders at the TUI Travel General Meeting;

(c)  the resolutions necessary to approve the Direct Capital Increase and
the Conditional Capital Increase (each requiring a majority of at least
three quarters of the share capital voting on such resolution) being passed
at the TUI AG EGM;

(d) in the minutes of the proceedings of the TUI AG EGM in the form of a
notarial deed it being recorded that the chairman of the TUI AG EGM
announced at the TUI AG EGM that the TUI AG Shareholders had approved (in
each case, with the required majority of share capital voting on such
resolutions):

          - the proposed election of each of the new members of the
            Supervisory Board of TUI AG, being certain of the existing
            independent non-executive directors of TUI Travel, as proposed
            by the Supervisory Board of TUI AG to the TUI AG Shareholders
            at the TUI AG EGM; and

       (ii) the proposed resolution regarding the amendment of the TUI AG
            Charter to allow TUI AG to appoint one or more chairmen to the
            Executive Board (as defined in the TUI AG Charter),

provided that the satisfaction of this condition shall not be affected by
any objections or legal actions in respect of any such resolution or
election which are raised or initiated or succeed before, during or after
the TUI AG EGM;

(f) the resolution of the Direct Capital Increase and the resolution of the
Conditional Capital Increase being registered at the commercial registries
in Hanover and Charlottenburg/Berlin;

(g) the sanction of the Scheme by the Court with or without modification
(but subject to any such modification being acceptable to TUI AG and TUI
Travel) and the confirmation of the Reduction of Capital by the Court and:

        (i) the delivery of an office copy of the Court Order and of the
            requisite Statement of Capital to the Registrar of Companies;
            and

       (ii) if the Court so orders for it to become effective, the
            registration of the Court Order and the Statement of Capital by
            the Registrar of Companies;

(h) (i) the UK Listing Authority having acknowledged to TUI AG or its agent
(and such acknowledgement not having been withdrawn) that the application
for the admission of the TUI AG Shares to listing on the premium segment of
the Official List has been approved and (after satisfaction of any
conditions to which such approval is expressed to be subject) will become
effective as soon as the UK Listing Authority's decision to admit the TUI
AG Shares is announced; and (ii) the London Stock Exchange having
acknowledged to TUI AG or its agent (and such acknowledgement not having
been withdrawn) that the TUI AG Shares will be admitted to trading on the
London Stock Exchange's main market for listed securities; and

(i) (i) an application having been made for the admission to trading of all
the New TUI AG Shares on the regulated market of the Frankfurt Stock
Exchange with simultaneous admission to the segment of the regulated market
with additional post-admission obligations (Prime Standard) of the
Frankfurt Stock Exchange as well as the regulated markets of the stock
exchanges in Stuttgart, Hamburg, Berlin, Düsseldorf, Hanover and Munich;
and (ii) Deutsche Bank (as German listing agent of TUI AG) not having
received any notification or other communication, in each case in writing,
from the Frankfurt Stock Exchange or any of the Stuttgart, Hamburg, Berlin,
Düsseldorf, Hanover or Munich stock exchanges that any such admission will
not be granted.

Upon the Scheme becoming Effective, it will be binding on all TUI Travel
Scheme Shareholders, irrespective of whether or not they attended or voted
at the TUI Travel Meetings (and, if they attended and voted, whether or not
they voted in favour). On Completion, TUI Travel will become a wholly-owned
subsidiary of TUI AG and share certificates in respect of TUI Travel Shares
will cease to be valid and entitlements to TUI Travel Shares held within
the CREST system will be cancelled.

The New TUI Travel Shares will be acquired by TUI AG pursuant to the Scheme
fully paid and free from all liens, charges, equities, encumbrances, rights
of pre-emption and any other interests of any nature whatsoever and
together with all rights attaching thereto, including voting rights and the
rights to receive and retain in full all dividends and other distributions
declared, made or paid on or after the Scheme Effective Date, save where
the record date for such dividend or other distribution falls prior to the
Scheme Effective Date or otherwise where TUI AG and TUI Travel agree.

The New TUI AG Shares issued in connection with the Scheme will rank pari
passu in all respects with TUI AG Shares, except that (as set out in
paragraph 7 above) the New TUI AG Shares will not carry dividend rights for
the financial year 2013/14. The TUI Travel Shareholders will receive a
second interim dividend (including a dividend in lieu of the final
dividend) for the financial year 2013/14 from TUI Travel rather than TUI
AG.

Being German securities, TUI AG Shares are not capable of being listed and
traded directly through CREST. Accordingly, to allow settlement within
CREST, TUI AG will enter into arrangements with the Depositary who will
create and issue TUI AG Depositary Interests with each TUI AG Depositary
Interest representing an entitlement to one TUI AG Share.

For technical legal reasons, it is anticipated that all New TUI AG Shares
will be issued to the Trustee (as trustee for the TUI Travel Scheme
Shareholders), being Capita IRG Trustees Limited, rather than to the TUI
Travel Scheme Shareholders directly. It is further anticipated that,
following the issue of the New TUI AG Shares to Capita IRG Trustees
Limited, it will cease to hold those shares in its capacity as Trustee and
will, from such time, hold the New TUI AG Shares in its capacity as the
Depositary. The Depositary will then create and issue TUI AG Depositary
Interests representing entitlements to the New TUI AG Shares. The TUI
Travel Scheme Shareholders will therefore be issued with (and become the
registered holders of) TUI AG Depositary Interests, rather than New TUI AG
Shares.

No fractions of TUI AG Depositary Interests will be issued pursuant to the
Merger and fractional entitlements will be rounded down to the nearest
whole number of TUI AG Depositary Interests.  Such fractional entitlements
will be aggregated and sold in the market by (or on behalf of) the
Depositary after the Scheme Effective Date.  The net proceeds of such sale
will be paid in cash by way of cheque (or for those TUI Travel Scheme
Shareholders who hold their TUI Travel Scheme Shares in CREST, their CREST
accounts shall be accredited with the relevant sale proceeds). Any amounts
of less than £5.00 (net of expenses) will be retained by the Depositary and
paid to TUI AG and therefore the TUI Travel Scheme Shareholders will not
receive a cheque or have their CREST account credited in respect of such
entitlement due to the administrative costs incurred in doing so. This
means that TUI Travel Scheme Shareholders who hold two or fewer TUI Travel
Scheme Shares will have their TUI Travel Scheme Shares cancelled, and will
not receive any TUI AG Depositary Interests pursuant to the Scheme unless
they increase their holdings of TUI Travel Scheme Shares on or prior to the
Scheme Record Time (though they may receive cash if the net proceeds from
the sale of their fractional entitlements amount to £5.00 or more).

If the Scheme does not become Effective on or before 30 September 2015 (or
such later date as TUI AG and TUI Travel may agree with the consent of the
Panel), it will lapse and the Merger will not proceed.

Further details of the Scheme will be included in the Scheme Document,
together with notices of the TUI Travel Court Meeting and the TUI Travel
General Meeting and the expected timetable for the Merger. The Scheme
Document will specify the action to be taken by TUI Travel Shareholders.
The Scheme Document will be sent to TUI Travel Shareholders as soon as
reasonably practicable.

It is expected that, subject to the approval of the Court, the TUI Travel
Court Meeting will be held on or around 28 October 2014. The TUI Travel
General Meeting is expected to be held on the same day following the
conclusion of the TUI Travel Court Meeting.

                        12. TUI AG shareholder approvals 

It is expected that the TUI AG EGM Invitation, containing details of the
Merger and notice of the TUI AG EGM at which resolutions will be proposed
for the approval of the Direct Capital Increase, the Conditional Capital
Increase and other matters relating to the Merger by existing TUI AG
Shareholders, will be published on or around 19 September 2014. It is
expected that the TUI AG EGM will be held on or around 27 October 2014.

The resolutions for approving the Direct Capital Increase and for approving
the Conditional Capital Increase must be passed at the TUI AG EGM and
registered with the appropriate commercial registries before the Scheme can
become Effective.

However, in accordance with German law, insofar as any shareholder
contestation actions (Anfechtungsklagen) are raised relating to those
resolutions, TUI AG will not be able to register the resolutions for the
Direct Capital Increase and the Conditional Capital Increase until such
actions have been concluded. The conclusion of any such actions could take
up to approximately four to seven months from the date when the TUI AG EGM
is held and therefore result in a delay before all of the Conditions are
satisfied and, if successful, could prevent satisfaction of all the
Conditions.

                        13. TUI Travel Share Plans

In respect of the TUI Travel Performance Share Plan, the TUI Travel
Deferred Annual Bonus Scheme and the TUI Travel Deferred Annual Bonus
Long-term Incentive Scheme, awards granted in 2011 are due to vest in the
normal course in December 2014, to the extent to which any applicable
performance conditions have been met on the vesting date.  Awards granted
in 2012 and 2013 will remain outstanding and capable of vesting in
accordance with the rules of the relevant TUI Travel Share Plan, as amended
to take account of the Merger and, where applicable, subject to appropriate
performance conditions continuing to apply.  A small number of residual
awards granted in 2009 and 2010 which are fully vested also remain
outstanding, and these awards will be released prior to, or on, the Court
sanctioning the Scheme.

Awards granted in 2009, 2010 and 2011 will be satisfied to the extent
possible using TUI Travel Shares held in the TUI Travel employee benefit
trust and otherwise by TUI Travel Shares being bought in the market. 
Awards granted in 2012 and 2013 will be satisfied to the extent they vest
by the issue of the requisite number of TUI Travel Shares. Any newly-issued
TUI Travel Shares will, pursuant to a proposed amendment to the TUI Travel
Articles, be immediately transferred to TUI AG in exchange for new TUI AG
Shares on a basis equivalent to the Exchange Ratio.  Alternatively, TUI
Travel may determine that any awards may be settled in cash.

TUI Travel Shares held under the TUI Travel Share Incentive Plan will be
subject to the Scheme, and the resulting TUI AG Shares will continue to be
held under the TUI Travel Share Incentive Plan.

TUI Travel intends to grant awards in or about December 2014, in line with
its normal practice and levels of grants. If granted prior to Completion,
such awards would be granted as awards over notional TUI Travel Shares to
be settled in cash, but otherwise on materially the same terms as the terms
of the TUI Travel Share Plans. Such awards would not vest at the time of
Completion, but would remain outstanding thereafter as awards over notional
TUI AG Shares.  Therefore, provided that Completion occurs, no further
awards capable of being satisfied in TUI Travel Shares will be granted by
TUI Travel. If Completion occurs prior to such awards being granted, any
such awards would be granted on the same basis but as cash-based awards
over notional TUI AG Shares.

Participants in the TUI Travel Share Plans will be contacted with further
details of the effect of the Merger on their outstanding awards in due
course.

                        14. TUI Travel Convertible Bonds

If the conversion rights under any TUI Travel Convertible Bonds are
exercised before the Scheme Record Time, the Converted Shares will be TUI
Travel Scheme Shares and therefore will be cancelled as part of the Scheme.

If the conversion rights under any TUI Travel Convertible Bonds are
exercised on or after the Scheme Record Time, the Converted Shares will not
be TUI Travel Scheme Shares and therefore will not be cancelled as part of
the Scheme. Instead, it is proposed that the TUI Travel Articles will be
amended at the TUI Travel General Meeting to include a provision pursuant
to which any TUI Travel Shares issued after the Scheme Record Time to any
person other than TUI AG (or its nominees) will be subject to a mandatory
transfer to TUI AG in exchange for entitlements to in new TUI AG Shares on
a basis equivalent to the terms of the Scheme.

                        15. TUI Travel pensions schemes

TUI Travel and TUI AG have been in discussions with the trustees of TUI
Travel's three UK defined benefit pension schemes. TUI Travel has reached
agreement in principle with the trustees on future funding arrangements in
respect of the current funding deficits in the schemes following
Completion. TUI AG has also reached agreement with the trustees on certain
support it will provide to the schemes following the Merger. Further
details will be set out in the Scheme Document.

                        16. Confidentiality agreement

TUI AG and TUI Travel entered into a mutual confidentiality agreement dated
16 June 2014 pursuant to which each of TUI AG and TUI Travel has undertaken
to keep certain information relating to the Merger and the other party
confidential and not to disclose it to third parties (other than to certain
permitted recipients) unless required by law or regulation. These
confidentiality obligations will remain in force following Completion.

                        17. Listing, dealings and settlement of TUI AG
                            Shares

Applications will be made to the UK Listing Authority for the admission to
the premium listing segment of the Official List of the UK Listing
Authority and to the London Stock Exchange for the admission to trading on
the main market for listed securities of the London Stock Exchange for all
TUI AG Shares. The decision on admission of the TUI AG Shares to the
premium listing segment of the Official List of the UK Listing Authority
and to trading on the main market for listed securities of the London Stock
Exchange is in the sole discretion of the UK Listing Authority and the
London Stock Exchange, respectively.

An application will be made for the admission of the New TUI AG Shares to
trading on the regulated market of the Frankfurt Stock Exchange with
simultaneous admission to the sub-segment of the regulated market with
additional post-admission obligations (Prime Standard) of the Frankfurt
Stock Exchange. The decision on admission of the New TUI AG Shares is in
the sole discretion of the Frankfurt Stock Exchange.

In addition, an application will be made for the admission of the New TUI
AG Shares to the regulated markets of the stock exchanges in Stuttgart,
Hamburg, Berlin, Düsseldorf, Hanover and Munich.

Conditional on the TUI AG Shares being admitted to the premium listing
segment of the Official List of the UK Listing Authority and to trading on
the main market for listed securities of the London Stock Exchange, TUI AG
will apply to delist its shares from the Prime Standard of the Frankfurt
Stock Exchange and the stock exchanges in Stuttgart, Hamburg, Berlin,
Düsseldorf, Hanover and Munich, with such de-listing anticipated to become
effective approximately three months thereafter for the Prime Standard of
the Frankfurt Stock Exchange.  The de-listing from the Prime Standard of
the Frankfurt Stock Exchange and the stock exchanges in Stuttgart, Hamburg,
Berlin, Düsseldorf, Hanover and Munich will be undertaken with the purpose
of ensuring that TUI AG is eligible for inclusion in the FTSE UK Index
Series.

In parallel, TUI AG intends to seek a secondary market quotation of its
shares on the Quotation Board of the Open Market on the Frankfurt Stock
Exchange to provide the opportunity for investors to trade their shares in
the Combined Group in euro on a German stock exchange.

Further details on de-listing, listing and re-registration will be
contained in the Scheme Document.

                        18. Indexation and FTSE Index Series inclusion

Following Completion, TUI AG will seek inclusion in the FTSE UK Index
Series (including FTSE 100).

As announced by FTSE on 5 August 2014, following consultation with the FTSE
Nationality Advisory Committee and in conjunction with the FTSE Nationality
rules and based on the details set out in the announcements by TUI AG and
TUI Travel on 27 June 2014 (and reconfirmed in this announcement), FTSE
would allocate TUI AG a UK classification for FTSE index inclusion
purposes.  As a consequence, subject to Completion, it is anticipated that
TUI AG will be eligible to replace TUI Travel in the FTSE UK Index Series
and be included in the FTSE Global Equity Index Series as a UK constituent.

                        19. TUI AG Depositary Interests

As noted in paragraph 11 oben, the TUI AG Shares, being German securities,
are not capable of being listed and traded directly through CREST.
Accordingly, TUI AG intends to enter into depositary arrangements which
will enable investors to hold TUI AG Shares in the form of dematerialised
depositary interests, which will be traded in sterling. TUI AG Depositary
Interests will represent entitlements to TUI AG Shares and each TUI AG
Depositary Interests will represent an entitlement to one TUI AG Share.

In respect of TUI Travel Shareholders who hold their TUI Travel Shares in
certificated form (for example because they do not have access to an
account in CREST) or persons who cannot or do not want to hold TUI AG
Depositary Interests directly, TUI AG intends to appoint a corporate
nominee, to hold such shareholders' TUI AG Depositary Interests on behalf
of such shareholders.

For those TUI Travel Shareholders who hold their TUI Travel Shares in
uncertificated form (that is, via CREST), TUI AG intends to procure that
such TUI Travel Scheme Shareholder's entitlement to TUI AG Depositary
Interests are delivered to the stock account in CREST in which each such
TUI Travel Scheme Shareholder held TUI Travel Scheme Shares as soon as
reasonably practicable, and in any event no later than the fourteenth day
following the Scheme Effective Date.

The New TUI AG Shares will be issued in registered form and it is intended
that the TUI AG Depositary Interests will trade under the same ISIN number
as the existing TUI AG Shares. However, if Completion occurs before the
annual general meeting of TUI AG expected to be held in February 2015, the
New TUI AG Shares will trade under a separate ISIN number to the TUI AG
Shares until after that meeting due to the non-eligibility of the New TUI
AG Shares for any final dividend for the financial year 2013/14.

                        20. Suspension and de-listing of TUI Travel Shares

Prior to the Scheme becoming Effective applications will be made to the UK
Listing Authority for the suspension of the listing of TUI Travel Shares on
the Official List of the UK Listing Authority and to the London Stock
Exchange for the suspension of trading of TUI Travel Shares on the main
market for listed securities of the London Stock Exchange. The last day of
dealings in TUI Travel Shares is expected to be the date of the Scheme
Court Hearing, following which TUI Travel Shares will be suspended from the
Official List of the UK Listing Authority and from the main market for
listed securities of the London Stock Exchange.

After Completion, applications will be made to the UK Listing Authority for
the cancellation of the listing of the TUI Travel Shares on the Official
List of the UK Listing Authority and to the London Stock Exchange for the
cancellation of trading of the TUI Travel Shares on the main market for
listed securities of the London Stock Exchange. It is intended that such
cancellations will become effective as soon as reasonably practicable
following the issuance of the New TUI AG Shares. It is also intended that,
following Completion, TUI Travel will be re-registered as a private company
under the relevant provisions of the UK Companies Act.

                        21. Disclosure of interests in relevant securities

TUI AG confirms that it made an Opening Position Disclosure, setting out
the details required to be disclosed by it under Rule 8.1(a) of the Code,
on 11 July 2014.

TUI Travel confirms that it made an Opening Position Disclosure, setting
out the details required to be disclosed by it under Rule 8.2(a) of the
Code, on 11 July 2014.

                        22. Overseas shareholders

The availability of TUI AG Depositary Interests under the Merger, and the
distribution of this announcement to persons who are not resident in the UK
may be affected by the laws of the relevant jurisdiction in which they are
located. Such persons should inform themselves of, and observe any
applicable legal or regulatory requirements of, their jurisdiction. TUI
Travel Shareholders who are in doubt regarding such matters should consult
an appropriate independent professional adviser in the relevant
jurisdiction without delay.

This announcement does not constitute an offer for sale of any securities
or an offer or an invitation to purchase any securities. TUI Travel
Shareholders are advised to read carefully the Scheme Document, the TUI AG
Prospectus and the Forms of Proxy once these have been published. TUI AG
Shareholders are advised to read carefully the TUI AG Prospectus, the TUI
AG EGM Invitation and the form of proxy accompanying the TUI AG EGM
Invitation once these have been published.

                        23. Documents available on websites

Copies of the following documents will published by no later than 12 noon
(London time) on the Business Day following this announcement on TUI
Travel's website at www.tuitravelplc.com and on TUI AG's website at
www.tui-group.com and will be made available until the end of the Offer
Period:

  - a copy of this announcement;

  - the irrevocable undertakings in paragraph 10 and set out in Appendix
    III to this announcement; and

  - the confidentiality agreement referred to in paragraph 16.

                        24. General

The Merger will be subject to the Conditions and certain terms set out in
Appendix I to this announcement and to the full terms and Conditions which
will be set out in the Scheme Document. Appendix II contains the bases and
sources of certain information contained in the full text of this
announcement. Appendix III contains details of the irrevocable undertakings
received in relation to the Merger that are referred to in this
announcement. Appendix IV contains details of and bases of belief of
anticipated quantified financial benefits relating to cost savings and cash
tax benefits arising out of the Merger. Appendix V contains details and
bases of anticipated quantified financial benefit statements relating to
the integration of Inbound Services into the Mainstream tourism business.
Appendix VI contains definitions of certain capitalised terms used in the
summary and in the full text of this announcement.

The Scheme will be governed by English law and will be subject to the
jurisdiction of the courts of England and Wales. The Scheme will be subject
to the applicable requirements of the Code, the Panel, the UK Listing
Authority, the London Stock Exchange and the FSMA.

Media calls

There will be conference calls for the UK and German newswires and national
media today, 15 September 2014.  The newswire calls will take place at
08.15hrs (BST), 09.15hrs (CEST). The national media calls will take place
at 11.00hrs (BST), 12.00hrs (CEST). Respective dial in details are below.

The UK media dial in details are:

UK newswire call at 08.15hrs (BST): +44 1452 555 566
UK newswire PIN code: 503 7004

UK national media call at 11.00hrs (BST): +44 1452 555 566
UK national media PIN code: 504 6416

The German media dial in details are:

German newswire call at 09.15hrs (CEST): +49 30 232 531 469 or +44 20 3147
4861 (no PIN code required for either dial in)

German national media call at 12.00hrs (CEST): +49 30 232 531 403 or +44 20
3367 9216 (no PIN code required for either dial in)

Analyst and investor briefing and webcast

A briefing and live webcast for analysts and investors will be held today,
15 September 2014, at 09.00hrs (BST), 10.00hrs (CEST) at the London Stock
Exchange, 10 Paternoster Square EC4M 7LS, United Kingdom. To access the
webcast, please go to www.tuitravelplc.com or www.tui-group.com for more
details. The presentation will be available to download from both websites
shortly before the webcast is due to start. A replay of the webcast will be
available through the respective websites shortly after it finishes.

Enquiries

TUI AG Contacts
Analysts & Investors:
Nicola Gehrt, Senior Manager Investor Relations
+49 (0) 511566-1435
Ina Klose, Manager Investor Relations
+49 (0) 511566-1318

Press:
Thomas Ellerbeck, Group Director Corporate & External Affairs
+49 (0) 511566-6000
Michael Röll, Head of Group Communications TUI AG
+49 (0) 511566-6020
Kuzey Esener, Head of Media Relations/Corporate Spokesperson
+49 (0) 511566-6024

Deutsche Bank (financial adviser and corporate broker to TUI AG):
+44 (0)20 7545 8000
Berthold Fuerst
James Ibbotson
Peter Krueger
James Agnew (Corporate Broking)

Greenhill (financial adviser to TUI AG):
+44 (0) 20 7198 7400
David Wyles
Philip Meyer-Horn
Alex Usher-Smith
TUI Travel Contacts 
Analysts & Investors:
Andy Long, Director of Strategy & Investor Relations
Tel: +44 (0)1293 645 831
Tej Randhawa, Investor Relations Manager
Tel: +44 (0)1293 645 829
Sarah Coomes, Investor Relations Manager
Tel: +44 (0)1293 645 827
 
Press:
Lesley Allan, Corporate Communications Director
Tel: +44 (0)1293 645 790
Mike Ward, External Communications Manager
Tel: +44 (0)1293 645 776
Michael Sandler / Katie Matthews (Hudson Sandler)
Tel: +44 (0)20 7796 4133

Lazard (lead financial adviser to the Independent Directors of TUI Travel):
+44 (0) 20 7187 2000
Nicholas Shott
Cyrus Kapadia
Vasco Litchfield
Aamir Khan

Bank of America Merrill Lynch (financial adviser to the Independent
Directors of TUI Travel and joint corporate broker to TUI Travel):
+44 (0) 20 7996 9777
Jonathan Bewes
Ed Peel

Barclays (financial adviser to the Independent Directors of TUI Travel and
joint corporate broker to TUI Travel):
+44 (0) 20 7623 2323
Jim Renwick
Robert Mayhew
Alex de Souza
 
APPENDIX I
CONDITIONS AND CERTAIN TERMS OF THE OFFER
PART A
CONDITIONS TO THE MERGER

The Merger is conditional upon the Scheme becoming unconditional and
Effective, subject to the Code, by no later than 30 September 2015 or such
later date (if any) as TUI AG and TUI Travel may, with the consent of the
Panel (if required), agree and the Court may allow.

  - Conditions to the Scheme

The Scheme will be subject to the following conditions:

its approval by a majority in number of the TUI Travel Scheme Shareholders
who are on the register of members of TUI Travel at the Voting Record Time
and who are present and voting (and entitled to vote) at the TUI Travel
Court Meeting or at any adjournment of that meeting), either in person or
by proxy, and who represent not less than 75% in nominal value of the TUI
Travel Scheme Shares held by those TUI Travel Scheme Shareholders;

the Special Resolution required to approve the Reduction of Capital, the
alteration of the TUI Travel Articles and such other matters as may be
necessary to implement the Scheme being duly passed by the requisite
majorities of TUI Travel Shareholders at the TUI Travel General Meeting;

the resolutions necessary to approve the Direct Capital Increase and the
Conditional Capital Increase (each requiring a majority of at least three
quarters of the share capital voting on such resolution) being passed at
the TUI AG EGM;

the resolution of the Direct Capital Increase and the resolution of the
Conditional Capital Increase being registered at the commercial registries
in Hanover and Charlottenburg/Berlin; and

the sanction of the Scheme by the Court with or without modification (but
subject to any such modification being acceptable to TUI AG and TUI Travel)
and the confirmation of the Reduction of Capital by the Court and:

the delivery of an office copy of the Court Order and of the requisite
Statement of Capital to the Registrar of Companies; and

if the Court so orders for it to become effective, the registration of the
Court Order and the Statement of Capital by the Registrar of Companies.

Conditions to the Merger

In addition, subject as stated in Part B below and to the requirements of
the Panel, TUI AG and TUI Travel have agreed that the Merger will be
conditional upon the following Conditions and, accordingly, the necessary
actions to make the Scheme Effective will not be taken unless such
Conditions (as amended if appropriate) have been satisfied (and continue to
be satisfied pending the commencement of the Scheme Court Hearing) or,
where relevant, waived prior to the Scheme being sanctioned by the Court:

Admission of New TUI AG Shares

(i)  the UK Listing Authority having acknowledged to TUI AG or its agent
(and such acknowledgement not having been withdrawn) that the application
for the admission of all the TUI AG Shares to the premium listing segment
of the Official List of the UK Listing Authority has been approved and
(after satisfaction of any conditions to which such approval is expressed
to be subject will become effective as soon as the UK Listing Authority's
decision to admit the TUI AG Shares is announced in accordance with LR
3.2.7G of the FCA's Listing Rules;

 (ii)  the London Stock Exchange having acknowledged to TUI AG or its agent
(and such acknowledgement not having been withdrawn) that all the TUI AG
Shares will be admitted to trading on the main market for listed securities
of the London Stock Exchange;

 (iii)  (A) an application having been made for the admission to trading of
all the New TUI AG Shares on the regulated market of the Frankfurt Stock
Exchange with simultaneous admission to the sub-segment of the regulated
market with additional post-admission obligations (Prime Standard) of the
Frankfurt Stock Exchange as well as the regulated markets of the stock
exchanges in Stuttgart, Hamburg, Berlin, Düsseldorf, Hanover and Munich;
and (B) Deutsche Bank (as German listing agent of TUI AG) not having
received any notification or other communication, in each case in writing,
from the Frankfurt Stock Exchange or any of the Stuttgart, Hamburg, Berlin,
Düsseldorf, Hanover or Munich stock exchanges that any such admission will
not be granted.

Governance of TUI AG

in the minutes of the proceedings of the TUI AG EGM in the form of a
notarial deed it being recorded that the chairman of the TUI AG EGM
announced at the TUI AG EGM that the TUI AG Shareholders had approved (in
each case, with the required majority of share capital voting on such
resolutions):

the proposed election of each of the new members of the Supervisory Board
of TUI AG, being certain of the existing independent non-executive
directors of TUI Travel as proposed by the Supervisory Board of TUI AG to
the TUI AG Shareholders at the TUI AG EGM; and

the proposed resolution regarding the amendment of the TUI AG Charter to
allow TUI AG to appoint one or more chairmen to the Executive Board (as
defined in the TUI AG Charter),

provided that the satisfaction of this condition shall not be affected by
any objections or legal actions in respect of any such resolution or
election which are raised or initiated or succeed before, during or after
the TUI AG EGM;

Other Third Party Clearances

(other than in respect of or in connection with the matters referred to in
Condition 2(a)) no central bank, government or governmental,
quasi-governmental, supranational, statutory, administrative or regulatory
body or association, institution or agency (including any trade agency) or
any court, employee representative body or any other body (including
without limitation any professional, environmental or investigative body or
authority) or person whatsoever in any jurisdiction (each a Third Party)
having given notice of a decision to institute or implement, or having
instituted, implemented or threatened in writing any action, proceeding,
suit, investigation, inquiry or reference (and, in each case, not having
expressly withdrawn the same) or having required any action to be taken or
otherwise having done anything, or having enacted, made or proposed any
statute, regulation, order or decision (and, in each case, not having
expressly withdrawn the same) and there not continuing to be outstanding
any statute, regulation, decision or order which would or might reasonably
be expected to (in any case which is material in the context of the
Merger):

make the Merger or its implementation, or the acquisition or proposed
acquisition of any shares or other securities in, or control or management
of, TUI Travel by TUI AG, void, unenforceable and/or illegal under the laws
of any relevant jurisdiction, or otherwise, directly or indirectly, prevent
or prohibit, restrict, restrain, or materially delay the same or otherwise
interfere, or impose additional conditions or obligations with respect to,
or otherwise challenge, impede, interfere or require amendment of the
Merger or the acquisition or proposed acquisition of any shares or other
securities in, or control or management of, TUI Travel by TUI AG to an
extent which is material in the context of the Merger;

require, prevent or materially delay the divestiture (or materially alter
the terms of any proposed divestiture) by any member of the Wider AG Group
or by any member of the Wider PLC Group of all or a material portion of its
businesses, assets or properties or impose any limitation on the ability of
all or any of them to conduct their respective businesses (or any part
thereof), to own, control or manage any of their respective assets or
properties (or any part thereof) to an extent which is material in the
context of the Wider PLC Group or Wider AG Group (as applicable) taken as a
whole;

impose any limitation on, or result in any delay in, the ability of TUI AG,
directly or indirectly, to acquire or hold or to exercise effectively all
or any rights of ownership in respect of shares or other securities in TUI
Travel or the ability of any member of the Wider AG Group or any member of
the Wider PLC Group directly or indirectly to acquire or hold or exercise
effectively all or any rights of ownership in respect of shares or other
securities (or the equivalent) in, or to exercise voting or management
control over, any member of the Wider PLC Group or the Wider AG Group to an
extent which is material in the context of the Wider PLC Group or Wider AG
Group (as applicable) taken as a whole;

except pursuant to Chapter 3 of Part 28 of the UK Companies Act (or in
connection with the implementation of the Merger), require any member of
the Wider AG Group or any member of the Wider PLC Group to acquire or offer
to acquire any shares, other securities (or equivalent) or other interests
in any member of the Wider PLC Group or any member of the Wider AG Group
(as applicable) owned by any Third Party;

require, prevent or delay the divestiture by any member of the Wider AG
Group or any member of the Wider PLC Group of any shares, securities (or
equivalent) or other interests in any member of the Wider PLC Group or any
member of the Wider AG Group or any asset to an extent which is material in
the context of the Wider PLC Group or Wider AG Group (as applicable) taken
as a whole;

impose any limitation on, or result in any delay in, the ability of any
member of the Wider AG Group or any member of the Wider PLC Group to
conduct, integrate or co-ordinate its business (or any part thereof) with
the businesses (or any part thereof) of any other member of the Wider AG
Group and/or any other member of the Wider PLC Group, to an extent which is
material in the context of the Wider PLC Group or the Wider AG Group (as
applicable) taken as a whole;

result in any member of the Wider AG Group or any member of the Wider PLC
Group ceasing to be able to carry on business under any name under which it
presently does so; or

otherwise adversely affect any or all of the business, assets, financial or
trading position, profits or prospects of any member of the Wider PLC Group
or any member of the Wider AG Group to an extent which is material in the
context of the Wider PLC Group or Wider AG Group (as applicable) taken as a
whole,

and all applicable waiting and other time periods (including any extensions
thereof) during which any such Third Party could decide to take, institute,
implement or threaten any such action, proceeding, suit, investigation,
inquiry or reference under the laws of any applicable jurisdiction in
respect of the Merger or the acquisition or the proposed acquisition of any
TUI Travel Shares by TUI AG having expired, lapsed or been terminated;

other than in relation to the matters referred to in Condition 2(a), all
material notifications, filings or applications in connection with the
Merger which are deemed necessary or reasonably considered appropriate by
TUI AG and TUI Travel (the "Notifications")  having been made and all
necessary waiting periods in respect of such Notifications (including any
extensions thereof) under any applicable legislation or regulation of any
relevant jurisdiction having expired, lapsed or been terminated (as
appropriate) and all statutory and regulatory obligations in any relevant
jurisdiction in respect of such Notifications having been complied with in
each case in respect of the Merger and all Authorisations deemed necessary
or reasonably considered appropriate by TUI AG and TUI Travel in any
relevant jurisdiction for or in respect of the Merger and, except pursuant
to Chapter 3 of Part 28 of the UK Companies Act, the acquisition or the
proposed acquisition of any shares or other securities in, or control or
management of, TUI Travel, by TUI AG having been obtained in terms and in a
form reasonably satisfactory to TUI AG and TUI Travel from all appropriate
Third Parties or (without prejudice to the generality of the foregoing)
from any person or bodies with whom any member of the Wider PLC Group or
any member of the Wider AG Group has entered into contractual arrangements
and all Authorisations deemed to be necessary or reasonably considered
appropriate by TUI AG and TUI Travel to carry on the business of any member
of the Wider PLC Group or any member of the Wider AG Group in any
jurisdiction having been obtained and all such Authorisations remaining in
full force and effect at the time at which the Merger becomes effective or
otherwise wholly unconditional and there being no notice of an intention to
revoke, suspend, restrict, modify or not to renew such Authorisations which
is material in the context of the Wider PLC Group or Wider AG Group (as
applicable) taken as a whole;

Absence of adverse circumstances

save as Disclosed, there being no provision of any agreement, arrangement,
lease, licence, franchise, permit or other instrument to which any member
of the Wider PLC Group or any member of the Wider AG Group is a party or by
or to which any such member or any of its assets is or may be bound,
entitled or subject which, as a result of the implementation of the Merger
or the acquisition or proposed acquisition by TUI AG or any member of the
Wider AG Group of any TUI Travel Shares, would or might reasonably be
expected to result in (in each case to an extent which is material in the
context of the Wider PLC Group or the Wider AG Group (as applicable) taken
as a whole):

any such arrangement, agreement, arrangement, lease, licence, franchise,
permit or other instrument being terminated or the rights, liabilities,
obligations or interests of any member of the Wider PLC Group or any member
of the Wider AG Group being adversely modified or adversely affected or any
obligation or liability arising or any adverse action being taken or
arising thereunder;

the rights, liabilities, obligations, interests or business of any member
of the Wider PLC Group or any member of the Wider AG Group under any such
arrangement, agreement, lease, licence, franchise, permit or other
instrument or the interests or business of any member of the Wider PLC
Group or any member of the Wider AG Group in or with any other person or
body or firm or company (or any agreement or arrangement relating to any
such interests or business) being or becoming capable of being terminated
or adversely modified or affected or any onerous obligation or liability
arising or any adverse action being taken thereunder;

any monies borrowed by, or any other indebtedness (actual or contingent)
of, or any grant available to, any member of the Wider AG Group or any
member of the Wider PLC Group becoming repayable, or becoming capable of
being declared repayable, immediately or earlier than the stated repayment
date or the ability of such member to borrow monies or incur any
indebtedness being withdrawn or inhibited or becoming capable of being
withdrawn or inhibited;

the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of
any member of the Wider PLC Group or any member of the Wider AG Group or
any such mortgage, charge or other security interest (whenever arising or
having arisen) becoming enforceable;

any asset or interest of any member of the Wider PLC Group or any member of
the Wider AG Group being or falling to be disposed of or ceasing to be
available to any member of the Wider PLC Group or any member of the Wider
AG Group or any right arising under which any such asset or interest could
be required to be disposed of or could cease to be available to any member
of the Wider PLC Group or any member of the Wider AG Group, otherwise than
in the ordinary course of business of the relevant party;

any member of the Wider PLC Group or any member of the Wider AG Group
ceasing to be able to carry on business under any name under which it
presently does so;

the value of any member of the Wider PLC Group or any member of the Wider
AG Group or its financial or trading position being prejudiced or adversely
affected;

the creation or acceleration of any liabilities (actual or contingent) by
any member of the Wider PLC Group or any member of the Wider AG Group,
other than trade creditors or other liabilities incurred in the ordinary
course of business; or

any liability of any member of the Wider PLC Group or any member of the
Wider AG Group to make any severance, termination, bonus or other payment
to its directors or other officers (or equivalent);

and no event having occurred which, under any provision of any agreement,
arrangement, lease, licence, franchise, permit or other instrument to which
any member of the Wider PLC Group or any member of the Wider AG Group is a
party or by or to which any such member or any of its assets is or may be
bound, entitled or subject, would be expected to result in any of the
events or circumstances as are referred to in Conditions 2(e)(i) to
2(e)(ix), (in each case to an extent which is material in the context of
the Wider PLC Group or any member of the Wider AG Group (as applicable)
taken as a whole);

Certain events occurring since 30 June 2014 

save as Disclosed, and except, where relevant, as between TUI Travel and
wholly-owned subsidiaries of TUI Travel, or as between TUI AG and
wholly-owned subsidiaries of TUI AG, or between the wholly-owned
subsidiaries of TUI Travel, or between the wholly-owned subsidiaries of TUI
AG, no member of the Wider PLC Group nor any member of the Wider AG Group
having since 30 June 2014:

issued, agreed to issue, authorised, proposed or announced its intention to
authorise or propose the issue of additional shares of any class, or
securities or securities convertible into, or exchangeable for, or rights,
warrants or options to subscribe for or acquire, any such shares or
transferred or sold (or agreed to transfer or sell), authorised or proposed
the transfer or sale of any TUI Travel Shares or TUI AG Shares out of
treasury (except for the issue or transfer out of treasury of TUI Travel
Shares or TUI AG Shares on the exercise of employee share options or
vesting of employee share awards in the ordinary course under any of the
TUI Travel Share Plans or TUI AG Share Plans (as applicable));

recommended, declared, paid or made or proposed to recommend, declare, pay
or make any bonus issue, dividend or other distribution, whether payable in
cash or otherwise, other than the dividends described in paragraph 7 of
this announcement;

other than pursuant to the Merger (and except for transactions in the
ordinary course of business), implemented, effected, authorised or proposed
or announced its intention to implement, effect, authorise or propose any
merger, demerger, reconstruction, amalgamation, scheme, commitment or
acquisition or disposal of assets or shares or loan capital (or the
equivalent thereof) in any undertaking or undertakings in any such case to
an extent which is material in the context of the Wider PLC Group or the
Wider AG Group (as applicable) taken as a whole;

entered into, implemented or authorised the entry into, any joint venture,
asset or profit sharing arrangement, partnership or merger of businesses or
corporate entities, in each case to an extent which is material in the
context of the Wider PLC Group or the Wider AG Group (as applicable) taken
as a whole;

purchased, redeemed or repaid or announced any proposal to purchase, redeem
or repay any of its own shares or other securities, except in respect of
the matters mentioned in sub-paragraph (i) above as permitted issuances or
transfers out of treasury, or, other than pursuant to the Merger, made any
other change to any part of its share capital;

made, authorised, proposed or announced an intention to propose any change
in its loan capital, or issued authorised or proposed or announced an
intention to authorise or propose the issue of or made any change in or to
the terms of any debentures or incurred or increased any indebtedness or
contingent liability (other than trade credit incurred in the ordinary
course of business), in each case to an extent which is material in the
context of the Wider PLC Group or the Wider AG Group (as applicable) taken
as a whole;

entered into, varied or terminated, or authorised, proposed or announced
its intention to the enter into, vary or terminate, any agreement,
transaction, contract, commitment or arrangement (whether in respect of
capital expenditure or otherwise) other than to an extent which is normal
in the ordinary course of the business concerned which is of a long term,
onerous or unusual nature or magnitude or which involves, or could
reasonably be expected to involve, an obligation of such nature or
magnitude which is reasonably likely to be restrictive on the business of
any member of the Wider PLC Group or any member of the Wider AG Group in
each case to an extent which is material in the context of the Wider PLC
Group or the Wider AG Group taken as a whole;

been unable or deemed unable, or admitted in writing that it is unable, to
pay its debts as they fall due or stopped or suspended (or threatened to
stop or suspend) payment of its debts generally or ceased or threatened to
cease carrying on all or a substantial part of its business, in each case
to an extent which is material in the context of the Wider PLC Group or the
Wider AG Group (as applicable) taken as a whole;

commenced negotiations with any of its creditors or taken any step with a
view to rescheduling or restructuring any of its indebtedness or entered
into a composition, compromise, assignment or arrangement with any of its
creditors whether by way of a voluntary arrangement, scheme of arrangement,
deed of compromise or otherwise, in each case to an extent which is
material in the context of the Wider PLC Group or the Wider AG Group (as
applicable) taken as a whole;

terminated or varied the terms of any agreement or arrangement between any
member of the Wider PLC Group or any member of the Wider AG Group and any
other person in a manner which would or might reasonably be expected to
have a material adverse effect on the financial position of the Wider AG
Group or the Wider PLC Group (as applicable) taken as a whole;

other than in respect of any member of the Wider PLC Group or any member of
the Wider AG Group which was dormant and was solvent at the relevant time,
taken or proposed any step or corporate action or had any legal proceedings
instituted, served or threatened in writing against it or any documents
filed in court for a moratorium of any indebtedness, for its winding-up
(voluntary or otherwise), dissolution or reorganisation (or for any
analogous proceedings or steps in any jurisdiction) or for the appointment
of a liquidator, provisional liquidator, receiver, administrator,
administrative receiver, trustee or similar officer (or for the appointment
of any analogous person in any jurisdiction) over all or any material part
of its assets or revenues or received written notice of the intention to
appoint or the appointment of any of the foregoing to it, in each case to
an extent which is material in the context of the Wider PLC Group or the
Wider AG Group (as applicable) taken as a whole;

waived, compromised, settled, abandoned or admitted any dispute, claim or
counter-claim whether by or against any member of the Wider PLC Group or
any member of the Wider AG Group (as applicable) other than in the ordinary
course of business, in each case to an extent which is material in the
context of the Wider PLC Group or the Wider AG Group (as applicable) taken
as a whole;

save as envisaged in accordance with the terms of the Merger, made any
alteration to its memorandum or articles of association or other
incorporation or constitutional documents;

entered into, or varied the terms of, or made any offer (which remains open
for acceptance) to enter into or vary to a material extent the terms of, or
terminated or given notice of termination of, any service agreement or
arrangement with any director (or equivalent) or senior executive of any
member of the Wider PLC Group or any member of the Wider AG Group, except
for salary increases, bonuses or variations of terms which are consistent
with past practice and in the ordinary course of business;

save as envisaged in accordance with the terms of the Merger, proposed,
agreed to provide, modified or agreed to modify the terms of any share
option scheme, incentive scheme or other benefit relating to the employment
or termination of employment of any person employed by any member of the
Wider PLC Group or any member of the Wider AG Group, in each case to an
extent which is material in the context of the Wider PLC Group or the Wider
AG Group (as applicable) taken as a whole;

except in relation to changes made or agreed as a result of, or arising
from, changes to legislation, made, agreed or consented to any change to
the terms of the trust deeds and rules constituting the pension schemes
established for its directors (or equivalent) and/or employees and/or their
dependants or the contributions payable to any such scheme(s) or to the
benefits which accrue, or to the pensions which are payable thereunder, or
to the basis on which qualification for, or accrual or entitlement to, such
benefits or pensions are calculated or determined or the basis upon which
the liabilities (including pensions) of such pension schemes are funded,
valued,  made or agreed or consented to, in each case to an extent which is
material in the context of the Wider PLC Group or the Wider AG Group (as
applicable) taken as a whole;

except for transactions in the ordinary course of business, granted any
lease in respect of any of the leasehold or freehold property owned or
occupied by it or transferred or otherwise disposed of any such property,
in each case to an extent which is material in the context of the Wider PLC
Group or the Wider AG Group (as applicable) taken as a whole;

except for transactions in the ordinary course of business, disposed of, or
transferred, mortgaged or created any security interest, over any material
asset or any right, title or interest in any material asset or authorised,
proposed or announced any intention to do so; or

entered into any contract, agreement, commitment or arrangement or passed
any resolution or made any offer (which remains open for acceptance) with
respect to, or publicly proposed or announced any intention to effect or to
propose to effect, any of the transactions, matters or events referred to
in this Condition 2(f);

No adverse change, litigation, regulatory enquiry of similar 

save as Disclosed, since 30 June 2014, there having been:

no adverse change and no circumstance having arisen which would or might be
expected to result in any adverse change in, the business, assets,
financial or trading position or profits or prospects or operational
performance of any member of the Wider PLC Group or any member of the Wider
AG Group which is material in the context of the Wider PLC Group or the
Wider AG Group (as applicable);

no litigation, arbitration proceedings, prosecution or other legal
proceedings in any relevant jurisdiction having been threatened in writing,
announced or instituted by or against or remaining outstanding by, against
or in respect of any member of the Wider PLC Group or any member of the
Wider AG Group to which any member of the Wider PLC Group or any member of
the Wider AG Group is or may become a party (whether as claimant or
defendant or otherwise), in each case to an extent which is material in the
context of the Wider PLC Group or the Wider AG Group (as applicable) taken
as a whole;

no enquiry, review or investigation by, or complaint or reference to, any
Third Party against or in respect of any member of the Wider PLC Group or
any member of the Wider AG Group having been threatened, announced or
instituted or remaining outstanding by, against or in respect of any member
of the Wider PLC Group or any member of the Wider AG Group, in each case
which might reasonably be expected to have a material adverse effect on the
Wider PLC Group or the Wider AG Group (as applicable) taken as a whole;

no steps having been taken and no omissions having been made which are
reasonably likely to result in the withdrawal, cancellation, termination or
modification of any licence held by any member of the Wider PLC Group or
any member of the Wider AG Group which is necessary for the proper carrying
on of its business, in each case to an extent which would have a material
adverse effect on the Wider PLC Group or the Wider AG Group (as applicable)
taken as a whole; and

no contingent or other liability (other than trade creditors and any other
liabilities arising in the ordinary course of business) having arisen or
increased which would or might reasonably be expected to affect adversely
the business, assets, financial or trading position or profits or prospects
of any member of the Wider PLC Group or any member of the Wider AG Group to
an extent which is material in the context of the Wider PLC Group or the
Wider AG Group (as applicable) taken as a whole; and

No discovery of certain matters regarding information, liabilities and
environmental issues

save as Disclosed, TUI AG not having discovered in relation to the Wider
PLC Group, and TUI Travel not having discovered in relation to the Wider AG
Group, that:

any financial, business or other information concerning the Wider PLC Group
or the Wider AG Group publicly announced prior to the date of this
announcement or disclosed at any time to any member of the Wider AG Group
or to any of their advisers by or on behalf of any member of the Wider PLC
Group, or to any member of the Wider PLC Group or to any of their advisers
by or on behalf of any member of the Wider AG Group, prior to the date of
this announcement is misleading, contains a material misrepresentation of
any fact, or omits to state a fact necessary to make that information not
misleading, to an extent which in any such case is material in the context
of the Wider PLC Group or the Wider AG Group (as applicable) taken as a
whole;

any member of the Wider PLC Group, any member of the Wider AG Group, any
partnership, company or other entity in which any member of the Wider PLC
Group or any member of the Wider AG Group (as applicable) has a significant
economic interest and which is not a subsidiary undertaking of TUI Travel
or TUI AG (as applicable) is subject to any liability (contingent or
otherwise), other than in the ordinary course of business, which is
material in the context of the Merger or in the context of the Wider PLC
Group or the Wider AG Group (as applicable) taken as a whole;

any past or present member of the Wider PLC Group or any past or present
member of the Wider AG Group has not complied in any material respect with
all applicable legislation, regulations or other requirements of any
relevant jurisdiction or any Authorisation of any Third Party with regard
to the use, treatment, storage, disposal, discharge, spillage, release,
leak or emission of any waste or hazardous substance or any substance
likely to impair the environment or harm human or animal health or
otherwise relating to environmental and/or health and safety matters or
that there has otherwise been any such use, treatment, storage, disposal,
discharge, spillage, release, leak or emission, in each case which would
give rise to any material liability including any penalty for
non-compliance (whether actual or contingent) on the part of any member of
the Wider PLC Group or any member of the Wider AG Group and which is
material in the context of the Wider PLC Group or the Wider AG Group (as
applicable) taken as a whole;

that there has been a material disposal, discharge, spillage, accumulation,
release, leak, emission or the migration, production, supply, treatment,
storage, transport or use of any waste or hazardous substance or any
substance likely to impair the environment (including any property) or harm
human or animal health which (whether or not giving rise to non-compliance
with any law or regulation) would be likely to give rise to any material
liability (whether actual or contingent) on the part of any member of the
Wider AG Group or any member of the Wider PLC Group which in any case is
material in the context of the Wider AG Group or the Wider PLC Group (as
applicable) taken as a whole; or

that there is or is reasonably likely to be any material obligation or
liability (whether actual or contingent) or requirement to make good,
remediate, repair, reinstate or clean up any property, asset or any
controlled waters currently or previously owned, occupied, operated or made
use of or controlled by any past or present member of the Wider PLC Group
(or on its behalf) or any past or present member of the Wider AG Group (or
on its behalf), or in which any such member may have or previously have had
or be deemed to have had an interest, under any environmental legislation,
common law, regulation, notice, circular, Authorisation or order of any
Third Party in any jurisdiction or to contribute to the cost thereof or
associated therewith or indemnify any person in relation thereto which in
any case is material in the context of the Wider PLC Group or the Wider AG
Group (as applicable)  taken as a whole.

The Scheme will not proceed if the Merger: (a) becomes subject to a CMA
Phase 2 Reference; or (b) the European Commission either: (i) initiates
proceedings under Article 6(1)(c) of the EU Merger Regulation in respect of
the Merger; or (ii) makes a referral of the Merger to a competent authority
of the UK under Article 9(1) of the EU Merger Regulation and there is
subsequently a CMA Phase 2 Reference in respect of the Merger, in each case
before the date of the TUI Travel Court Meeting.  In such event neither TUI
Travel, TUI AG nor any TUI Travel Shareholder will be bound by any term of
the Scheme.

PART B
CERTAIN TERMS OF THE SCHEME AND THE MERGER

  - Subject to the requirements of the Panel, TUI AG reserves the right to
    waive, in whole or in part, Conditions 2(c) to 2(h) (inclusive), so far
    as they relate to TUI Travel, the Wider PLC Group or any part thereof.

  - Subject to the requirements of the Panel, TUI Travel reserves the right
    to waive, in whole or in part, (i) Condition 2(b) and (ii) Conditions
    2(c) to 2(h) (inclusive), so far as they relate to TUI AG, the Wider AG
    Group or any part thereof.

The Scheme will not become Effective unless the Conditions have been
fulfilled or (if capable of waiver) waived or, where appropriate, have been
determined by TUI AG and TUI Travel to be or remain satisfied by no later
than the date referred to in Condition 1 (or such later date as TUI AG and
TUI Travel may agree and (if required) the Panel and the Court may allow).

Neither TUI AG nor TUI Travel shall be under any obligation to waive (if
capable of waiver), to determine to be or remain satisfied or to treat as
fulfilled any of the Conditions capable of waiver by it as set out at
paragraph 1 or paragraph 2 of this Part B above (as applicable) by a date
earlier than the latest date for the fulfilment of that Condition
notwithstanding that the other Conditions of the Merger may at such earlier
date have been waived or fulfilled and that there are at such earlier date
no circumstances indicating that any of such Conditions may not be capable
of fulfilment.

TUI AG reserves the right to elect, with the consent of the Panel and with
TUI Travel's prior written consent to implement the merger by way of a
Merger Offer. In such event, the Merger will be implemented on
substantially the same terms subject to appropriate amendments (including,
without limitation, an acceptance condition set at 90% (or such other
percentage as TUI AG and TUI Travel may agree) of the TUI Travel Shares to
which the Merger Offer relates), so far as applicable, as those which would
apply to the Scheme.

The availability of the Merger to persons not resident in the UK may be
affected by the laws of the relevant jurisdictions. Persons who are not
resident in the UK should inform themselves about, and observe, any
applicable requirements.

Unless otherwise determined by TUI AG or required by the Code and permitted
by applicable law and regulation, this announcement should not be forwarded
or transmitted in or into any jurisdiction in which such act would
constitute a violation of the relevant laws in such jurisdiction.

The Merger is not being, and will not be, made, directly or indirectly, in
or into or by the use of the mails of, or by any other means or
instrumentality (including, without limitation, facsimile transmission,
telex, telephone, internet or other forms of electronic transmission) of
interstate or foreign commerce of, or by any facility of a national state
or other securities exchange of any jurisdiction and where to do so would
violate the laws of that jurisdiction.

If the Scheme becomes Effective, the New TUI Travel Shares to be issued
pursuant to the Scheme will be acquired by TUI AG fully paid and free from
all liens, charges, equities, encumbrances, rights of pre-emption and any
other interests of any nature whatsoever and together with all rights
attaching thereto, including voting rights and the rights to receive and
retain in full all dividends and other distributions declared, made or paid
on or after the Scheme Effective Date, save where the record date for such
dividend or other distribution falls prior to the Scheme Effective Date or
otherwise where TUI Travel and TUI AG agree otherwise.

Under Rule 13.5 of the Code, TUI AG may not invoke a Condition so as to
cause the Merger not to proceed, to lapse or any offer to be withdrawn
unless the circumstances which give rise to the right to invoke the
Condition are of material significance to TUI AG in the context of the
Merger. The Conditions contained in Condition 1 of Part A and, if
applicable, any takeover offer acceptance condition adopted on the basis
specified in paragraph 5 of this Part B, are not subject to this provision
of the Code.

The Scheme will be governed by English law and will be subject to the
jurisdiction of the courts of England and Wales and to the Conditions set
out in this announcement and in the Scheme Document. The Scheme will be
subject to applicable requirements of the Code, the Panel, the UK Listing
Authority, the London Stock Exchange and the FSMA.

Each of the Conditions shall be regarded as a separate Condition and shall
not be limited by reference to any other Condition.

 
APPENDIX II

BASES AND SOURCES OF INFORMATION

  -  TUI Travel Shares: As at the close of business on 12 September 2014
    (being the last practicable date prior to the release of this
    announcement), there were in issue:

    (a) 1,133,842,328 ordinary shares with a nominal value of 10 pence
        each.  TUI Travel holds no shares in Treasury. The ISIN for the
        ordinary shares is GB00B1Z7RQ77.

    (b) GBP 294,700,000 of convertible bonds with a coupon of 6.0% due in
        October 2014 (the "TUI Travel 2014 Convertible Bonds"). The ISIN
        for the 2014 Convertible Bonds is XS0455660216.

    (c) GBP 400,000,000 of convertible bonds with a coupon of 4.9% due in
        April 2017 (the "TUI Travel 2017 Convertible Bonds"). The ISIN for
        the 2017 Convertible Bonds is XS0503743949.

The TUI Travel 2014 Convertible Bonds and the TUI Travel 2017 Convertible
Bonds are convertible into TUI Travel ordinary shares.

  -  TUI AG Shares (see note below): As at the close of business on 12
    September 2014 (being the last practicable date prior to the release of
    this announcement), there were in issue:

    (a) 286, 561,143 ordinary shares (without par value). TUI AG holds no
        shares in Treasury. The International Securities Identification
        Number (ISIN) for the ordinary shares is DE000TUAG000.

    (b) EUR 25,477,664 of convertible bonds with a coupon of 5.5% due in
        November 2014 in issue (the "TUI AG November 2014 Bonds"). The ISIN
        for the November 2014 Bonds is DE000TUAG117.

    (c) EUR 338,944,148 of convertible bonds with a coupon of 2.75% due in
        March 2016 in issue (the "TUI AG March 2016 Bonds"). The ISIN for
        the March 2016 Bonds is DE000TUAG158.

The TUI AG November 2014 Bonds and the TUI AG March 2016 Bonds are
convertible into TUI AG ordinary shares.

Note: Insofar as the total number of ordinary shares comprises the
registered share capital of TUI AG, together with all shares issued out of
the conditional capital since the date that TUI AG's registered share
capital was last recorded with the Commercial Register and in the TUI AG
Charter.

  -  The fully diluted share capital of TUI Travel is 1,357,000,718,
    calculated on the basis of:

    (a) the number of TUI Travel Shares set out in paragraph 1(a) above;

    (b) the maximum number of TUI Travel Shares which could be issued
        pursuant to the exercise of conversion rights under the TUI Travel
        2014 Convertible Bonds;

    (c) the maximum number of TUI Travel Shares which could be issued
        pursuant to the exercise of conversion rights under the TUI Travel
        2017 Convertible Bonds; and

    (d) the maximum number of TUI Travel Shares which would be issued to
        satisfy any TUI Travel share options in full.

  - The fully diluted share capital of TUI AG is 320,061,082, calculated on
    the basis of:

    (a) the number of TUI AG ordinary shares set out in paragraph 3(a)
        above;

    (b) the maximum number of TUI AG Shares which could be issued pursuant
        to the exercise of conversion rights under the TUI AG November 2014
        Bonds; and

    (c) the maximum number of TUI AG Shares which could be issued pursuant
        to the exercise of conversion rights under the TUI AG March 2016
        Bonds.

 5. Mr. Alexey Mordashov's interest in TUI AG is held via S-Group Travel
    Holding GmbH (which holds 65,592,219 TUI AG Shares) and Unifirm Limited
    (which holds 7,630,127 TUI AG Shares), both of which are ultimately
    owned and controlled by Mr. Alexey Mordashov. See Form 8 (Opening
    Position Disclosure) for TUI AG dated 10 July 2014.

 6. Return on capital: Return on capital is calculated as the ratio of
    underlying net operating profit after tax (being underlying EBITA after
    tax charged at the effective annual rate) to the average capital. TUI
    AG's return on invested capital for the financial year 2012/13 was
    10.6% for TUI AG Hotels & Resorts as sourced from pages 58 and 59 of
    TUI AG's 2012/13 Annual Report.

 7. Potential contribution to EBITA of new hotel content: The figure stated
    for EUR1.4 million of EBITA contribution from each hotel is based on
    financial year 2012/13 historical data. In financial year 2012/13, on
    average, each RIU and Robinson hotel contributed EUR1.4 million to TUI
    AG's EBITA.

 8. Calculation of EBITA impact from increased occupancy from vertical
    integration: The figure set out in respect of the additional profit
    resulting from a 1 percentage point improvement in occupancy in
    existing TUI AG hotels of approximately EUR6.1 million (£4.9 million)
    has been calculated by assuming a 1 percentage point increase in
    occupancy rates across the whole hotel portfolio, which by itself would
    be assumed to have the impact of increasing gross margin by 1
    percentage point. To be prudent, a corresponding discount in average
    prices per bed has been assumed. The combination of these two changes
    results in the stated profit uplift. No change in the underlying fixed
    cost base (i.e. costs below gross margin) has been assumed.

 9. TUI AG Hotels & Resorts operational and invested capital data: The
    breakdown of the proportion of hotels within the TUI AG Group that are
    either operated under management contracts, leased or franchised, or
    owned is sourced from page 51 of TUI AG's 2012/13 Annual Report, which
    states that "In financial year 2012/13, TUI Hotels & Resorts comprised
    a total of 232 hotels. 50% were operated in the framework of management
    contracts, 41% were owned by the respective hotel company, 6% were
    leased and 3% of the hotels were managed under franchise agreements".
    The figure for invested capital in the TUI AG Hotels & Resorts
    portfolio is sourced from page 59 of TUI AG's 2012/13 Annual Report,
    where it is stated to be EUR1,859.3 million.

10. Exchange Rates: Unless otherwise stated, in this announcement the
    exchange rates used to convert between: (a) pounds sterling and euro
    are £1.00:EUR1.2535 and EUR1.00:£0.7978; and (b) pounds sterling and US
    dollars are £1.00:US$1.6231 and US$1.00:£0.6161.

 
APPENDIX III

DETAILS OF IRREVOCABLE UNDERTAKINGS

Irrevocable undertakings in respect of TUI Travel Shares

The following directors of TUI Travel have given irrevocable undertakings
on behalf of themselves, their families and related trusts to vote in
favour of the Scheme at the TUI Travel Court Meeting and the related
resolutions to be proposed at the TUI Travel General Meeting in relation to
the following TUI Travel Shares:

<pre>

Name of TUI Travel      Total number of TUI Travel   Percentage of issued
director giving         Shares in respect of which   ordinary share capital
irrevocable undertaking undertaking given            of TUI Travel

Valerie Gooding         2,493                        0.000%


Sir Michael Hodgkinson  20,000                       0.002%


                        15,000                       0.001%
Janis Kong

                        3,025,860                    0.267%
Peter Long

                        534,021                      0.047%
Johan Lundgren

                        6,891                        0.001%
Minnow Powell

                        556,763                      0.049%
William Waggott


Total
                        4,161,028                    0.367%



</pre>

The irrevocable undertakings from the directors of TUI Travel shall each
lapse upon the earlier of: (i) the date on which the Merger lapses or is
withdrawn without having become effective in accordance with its terms (in
the case of the Scheme) or wholly unconditional (in the case of a Merger
Offer), save in circumstances where a new or replacement scheme of
arrangement or a Merger Offer is announced on substantially the terms and
conditions contained in this announcement, which itself has not lapsed or
been withdrawn; and (ii) the date on which the Scheme becomes effective in
accordance with its terms or the Merger Offer becomes wholly unconditional.
 
APPENDIX IV

RECONFIRMED QUANTIFIED FINANCIAL BENEFITS STATEMENTS

This announcement includes estimated cost savings and cash tax benefits
arising from the Merger, set out in paragraphs 3(b)(i) and 3(b)(ii) of this
announcement, which were included in the announcements made by TUI Travel
and TUI AG on 27 June 2014  regarding the Merger (together, the
"Reconfirmed Quantified Financial Benefits Statements").

Further information on the bases of belief supporting the Reconfirmed
Quantified Financial Benefits Statements, including the principal
assumptions and sources of information, is set out below.

Bases of belief

Following initial discussions between the parties regarding the Merger in
May and June 2014, TUI AG and TUI Travel established a senior executive
team to evaluate and assess the potential synergies available for the
integration.

The team, which comprised senior strategy, financial and human resources
personnel from both TUI AG and TUI Travel, worked collaboratively during
the 6 weeks prior to the announcements made by TUI Travel and TUI AG on 27
June 2014 to identify and quantify potential synergies as well as estimate
any associated costs.

In preparing the Reconfirmed Quantified Financial Benefits Statements, both
TUI AG and TUI Travel have shared certain operating and financial
information to facilitate a detailed analysis in support of evaluating the
potential synergies available from the Merger.

The cost bases used as the basis for the quantification exercise were the
six months actual cost base to March 2014 plus six months of the latest
forecast cost base to September 2014 for each business.

The exchange rate used in the announcements of TUI Travel and TUI AG on 27
June 2014 to convert between EUR and GBP was 0.8000.  The exchange rate
used in this announcement to convert between EUR and GBP is set out in
Appendix II.

Confirmations

The members of the New Executive Board of TUI AG are responsible for the
Reconfirmed Quantified Financial Benefits Statements. The members of the
New Executive Board of TUI AG have received confirmations from each of
PricewaterhouseCoopers LLP, Deutsche Bank, Greenhill and Lazard that their
respective reports produced in connection with the Reconfirmed Quantified
Financial Benefits Statements, which were set out in Appendix I to the
announcements of TUI Travel and TUI AG on 27 June 2014, continue to apply.

Notes 

 1. The statements of estimated cost savings and cash tax benefits relate
    to future actions and circumstances which, by their nature, involve
    risks, uncertainties and contingencies. As a result, the cost savings
    and synergies referred to may not be achieved, or may be achieved later
    or sooner than estimated, or those achieved could be materially
    different from those estimated.

No statement in the Reconfirmed Quantified Financial Benefits Statements,
or this announcement generally, should be construed as a profit forecast or
interpreted to mean that the Combined Group's earnings in the first full
year following the Merger, or in any subsequent period, would necessarily
match or be greater than or be less than those of TUI AG and/or TUI Travel
for the relevant preceding financial period or any other period.

 2. Due to the scale of the Combined Group, there may be additional changes
    to the Combined Group's operations. As a result, and given the fact
    that the changes relate to the future, the resulting cost savings may
    be materially greater or less than those estimated.

 3. In arriving at the Reconfirmed Quantified Financial Benefits Statements
    it was assumed that:

    (a)  There will be no significant impact on the underlying operations
        of either business.

    (b)  There will be no material change to macroeconomic, political or
        legal conditions in the markets or regions in which TUI AG and TUI
        Travel operate that materially impact on the implementation or
        costs to achieve the proposed cost savings.

    (c)  There will be no material change in exchange rates.

    (d)  There will be no material change in tax legislation or tax rates
        in the countries in which TUI AG and TUI Travel operate that could
        materially impact the ability to achieve the cash tax benefit.

    (e)  Achievement of the cash tax benefits would be facilitated by the
        Combined Group being a German domiciled and headquartered business.

 
APPENDIX V

QUANTIFIED FINANCIAL BENEFITS STATEMENT IN RELATION TO 
THE INTEGRATION OF INBOUND SERVICES INTO THE MAINSTREAM TOURISM BUSINESS

PART A

This announcement includes a statement on the estimated net benefits
expected to arise from the Integration of Inbound Services into the
Mainstream tourism business (the "Inbound Services Quantified Financial
Benefits Statement"), which is set out in paragraph 3(b)(iii) of this
announcement.

Aside from the one-off costs set out in the Inbound Services Quantified
Financial Benefits Statement, and the loss of gross margin due to the
discontinuance of unprofitable contracts, no material dis-synergies
(whether or not recurring) are expected in connection with the Inbound
Services Quantified Financial Benefits Statement. The New Executive Board
of TUI AG considers that these net benefits could have been achieved
independently of the Merger but the Combined Group's strategy now provides
an opportunity to optimise the Combined Group's operating structure and
achieve these benefits.

Further information on the bases of belief supporting the Inbound Services
Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out below.

Bases of belief

As a consequence of the strategic decision to operate the current Online
Accommodation businesses and Specialist & Activity sector of TUI Travel
separately from the Mainstream tourism business, additional cost savings
have been identified. These cost savings could have been achieved
independently of the Merger but are only arising now as a result of the
Combined Group's strategy.

The proposed net benefits are expected to arise from the integration of the
Mainstream-related Inbound Services into the Mainstream tourism business.
The main components of the net benefits are:
  - consolidation of overlapping functions, which represents approximately
    three quarters of the savings identified

  - property costs; and 

  - travel expenses, which arise in approximately equal proportions.

The baseline for the cost savings is the latest forecast for the financial
year 2013/14 (nine months actual to 30 June 2014 and three months forecast
for Q4 2013/14). Benefits and costs have been calculated from this
baseline.

As a consequence of the integration of the Mainstream-related Inbound
Services business into the Mainstream tourism business, over time it will
become unprofitable to continue certain third party commercial agreements.
As a result a level of revenue and gross margin loss is planned from
discontinuing this business.

The financial benefits are expected to be achieved progressively from
Completion onwards and be realised in full by the end of the third full
financial year following Completion. The proposed cost savings are all
expected to be recurring annual benefits at full run rate. The one-off cash
costs to deliver the savings have been assessed on a bottom-up basis in
line with the target operating model and expected resource requirement to
implement the change.

Reports

As required by the Panel, PricewaterhouseCoopers LLP, as reporting
accountants to TUI AG have provided a report under Rule 28.1(a) of the Code
stating that, in their opinion, the Inbound Services Quantified Financial
Benefits Statement has been properly compiled on the basis stated. In
addition Deutsche Bank and Greenhill, as financial advisors to TUI AG, and
Lazard, as financial adviser to the Independent Directors of TUI Travel,
have provided reports stating that, in their opinion, and subject to the
terms of such reports, the Inbound Services Quantified Financial Benefits
Statement, for which members of the New Executive Board of TUI AG are
responsible, has been prepared with due care and consideration.

Copies of these reports are included below. Each of PricewaterhouseCoopers
LLP, Deutsche Bank, Greenhill and Lazard has given and not withdrawn its
consent to the publication of its report in the form and context in which
it is included.

Notes
  - The statements of estimated net benefits relate to future actions and
    circumstances which, by their nature, involve risks, uncertainties and
    contingencies. As a result, the net benefits referred to may not be
    achieved, or may be achieved later or sooner than estimated, or those
    achieved could be materially different from those estimated.

  - No statement in the Inbound Services Quantified Financial Benefits
    Statement, or this announcement generally, should be construed as a
    profit forecast or interpreted to mean that the Combined Group's
    earnings in the first full year following the Merger, or in any
    subsequent period, would necessarily match or be greater than or be
    less than those of TUI AG and/or TUI Travel for the relevant preceding
    financial period or any other period.

  - Due to the scale of the Combined Group, there may be additional changes
    to the Combined Group's operations. As a result, and given the fact
    that the changes relate to the future, the resulting net benefits may
    be materially greater or less than those estimated.

  - In arriving at the Inbound Services Quantified Benefits Statements, the
    New Executive Board of TUI AG has assumed that:

    (a)  There will be no significant impact on the underlying operations
        of either business.

    (b)  There will be no material change to macroeconomic, political or
        legal conditions in the markets or regions in which TUI AG and TUI
        Travel operate that materially impact on the implementation or
        costs to achieve the proposed cost savings.

 

    (c)  There will no material change in exchange rates.

 

    (d)  There will be no material change in tax legislation or tax rates
        in the countries in which TUI AG and TUI Travel operate that could
        materially impact the cash tax charge arising.

 
PART B

Report from PricewaterhouseCoopers LLP

The New Executive Board
TUI AG
Karl-Wiechert-Allee 4
30625 Hanover

Germany

Deutsche Bank AG, London Branch

1 Great Winchester Street

London

EC2N 2DB

Greenhill & Co. Europe LLP

Lansdowne House
57 Berkeley Square

London

W1J 6ER

Lazard & Co., Limited

50 Stratton Street

London

W1J 8LL

(Lazard & Co., Limited, Deutsche Bank AG, London Branch and Greenhill & Co.
Europe LLP, the "Financial Advisers")

15 September 2014

Dear Sirs

Recommended all-share nil-premium merger of TUI Travel PLC ("TUI Travel")
and TUI AG ("TUI AG") (the "Merger")

We report on the statement (the "Statement") by the Executive Board
(Vorstand) of TUI AG as will be constituted immediately after completion of
the Merger (the "New Executive Board") set out in the paragraph titled:
"Integration of Inbound Services into the Mainstream tourism business" of
the Rule 2.7 Announcement dated 15 September 2014 (the "Announcement") to
the effect that:

  - "As a consequence of the strategic decision to operate the current
    Online Accommodation businesses and Specialist & Activity sector of TUI
    Travel separately from the Mainstream tourism business, additional cost
    savings have been identified:

  - Recurring net cost savings of at least EUR20 million (£16 million) per
    annum have been identified as further described below:

          - These cost savings mainly comprise savings from the
            consolidation of overlapping functions, property costs and
            travel expenses.

          - At least EUR30 million (£24 million) of cost savings are
            expected to arise as the Mainstream tourism business
            reorganises and takes over the management of the Inbound
            Services business related to Mainstream.

          - These savings are expected to be achieved progressively from
            Completion onwards and be realised in full at the end of the
            third full financial year following Completion.

          - As a further consequence of this proposed reorganisation, over
            time it will become unprofitable to continue certain third
            party commercial agreements with a consequential recurring loss
            of gross margin of EUR10 million (£8 million) per annum.

Estimated one-off cash costs of approximately EUR76 million (£61 million)
are expected to be incurred to achieve these savings, which includes EUR19
million (£15 million) of capital gains tax from the proposed corporate
restructuring and indirect taxes."

The Statement has been made in the context of disclosure in Part A of
Appendix V of the Announcement setting out the bases of belief of the New
Executive Board supporting the Statement and their analysis and explanation
of the underlying constituent elements.

This report is required by Rule 28.1(a)(i) of the City Code on Takeovers
and Mergers (the "Code") and is given for the purpose of complying with
that rule and for no other purpose.

Responsibilities

It is the responsibility of the New Executive Board to make the Statement
in accordance with the Code.

It is our responsibility to form our opinion as required by Rule 28.1(a)(i)
of the Code, as to whether the
Statement has been properly compiled on the basis stated.

Save for any responsibility which we may have to those persons to whom this
report is expressly addressed or to the shareholders of TUI Travel as a
result of the inclusion of this report in the Announcement, and for any
responsibility arising under Rule 28.1(a)(i) of the Code to any person as
and to the extent therein provided, to the fullest extent permitted by law
we do not assume any responsibility and will not accept any liability to
any other person for any loss suffered by any such other person as a result
of, arising out of, or in connection with this report or our statement,
required by and given solely for the purposes of complying with Rule
23.3(b) of the Code, consenting to its inclusion in the Announcement.

Basis of Opinion

We conducted our work in accordance with the Standards for Investment
Reporting issued by the Auditing Practices Board in the United Kingdom. We
have discussed the Statement together with the relevant bases of belief
(including sources of information and assumptions) with the New Executive
Board and with the Financial Advisers. Our work did not involve any
independent examination of any
of the financial or other information underlying the Statement.

Since the Statement and the assumptions on which it is based relate to the
future and may therefore be

affected by unforeseen events, we can express no opinion as to whether the
actual benefits achieved will correspond to those anticipated in the
Statement and the differences may be material.

Our work has not been carried out in accordance with auditing or other
standards and practices generally accepted in the United States of America
or other jurisdictions and accordingly should not be relied upon as if it
had been carried out in accordance with those standards and practices.

Opinion

In our opinion, on the basis of the foregoing, the Statement has been
properly compiled on the basis stated.

Yours faithfully,

PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP is a limited liability partnership registered in
England with registered number OC303525.  The registered office of
PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH.
PricewaterhouseCoopers LLP is authorised and regulated by the Financial
Conduct Authority for designated investment business
 
PART C
Report from Deutsche Bank and Greenhill

The Executive Board 
on behalf of TUI AG 
Karl-Wiechert-Allee 4
30625 Hanover
Germany

15 September 2014

Dear Sirs,

Recommended all-share nil-premium merger of TUI Travel PLC ("TUI Travel")
and TUI AG ("TUI AG")

We refer to the Inbound Services Quantified Financial Benefits Statement,
the bases of belief thereof and the notes thereto (together, the
"Statement") as set out in Part A of Appendix V of this announcement, for
which the Executive Board (Vorstand) of TUI AG as will be constituted
immediately after completion of the Merger (the "New Executive Board") is
responsible under Rule 28 of the City Code on Takeovers and Mergers (the
"Code").

We have discussed the Statement (including the assumptions and sources of
information referred to therein), with the New Executive Board and those
officers and employees of TUI AG and TUI Travel who developed the
underlying plans. The Statement is subject to uncertainty as described in
this announcement and our work did not involve an independent examination
of any of the financial or other information underlying the Statement.

We have relied upon the accuracy and completeness of all the financial and
other information provided to us by TUI AG and/or TUI Travel, or otherwise
discussed with us, and we have assumed such accuracy and completeness for
the purposes of providing this letter.

We do not express any opinion as to the achievability of the quantified
financial benefits identified by the New Executive Board.

We have also reviewed the work carried out by PricewaterhouseCoopers LLP
and have discussed with them the opinion set out in Part B of Appendix V of
this announcement addressed to yourselves and ourselves on this matter.

This letter is provided to you solely in connection with Rule 28.1(a)(ii)
of the City Code on Takeovers and Mergers and for no other purpose.  No
person other than the Executive Board (Vorstand) of TUI AG can rely on the
contents of this letter and, to the fullest extent permitted by law, we
exclude all liability  (whether in contract, tort or otherwise) to any
other person, in respect of this letter, its contents or the work
undertaken in connection with this letter or any of the results that can be
derived from this letter or any written or oral information provided in
connection with this letter, and any such liability is expressly
disclaimed, except to the extent that such liability cannot be excluded by
law.

On the basis of the foregoing, we consider that the Statement, for which
you, as members of New Executive Board are responsible, has been prepared
with due care and consideration.

Yours faithfully,       Yours faithfully,

Deutsche Bank AG, London Branch    Greenhill & Co. Europe LLP

 
PART D
Report from Lazard & Co., Limited

The Independent Directors
TUI Travel PLC
TUI Travel House
Crawley Business Quarter
Fleming Way
Crawley
West Sussex
RH10 9QL

15 September 2014

Dear Sirs,

Recommended all-share nil-premium merger of TUI Travel PLC ("TUI Travel")
and TUI AG ("TUI AG")

We refer to the Inbound Services Financial Benefits Statement, the bases of
belief thereof and the notes thereto (together, the "Statement") as set out
in Part A of Appendix V of this announcement, for which the Executive Board
(Vorstand) of TUI AG as will be constituted immediately after completion of
the Merger (the "New Executive Board") is responsible under Rule 28 of the
City Code on Takeovers and Mergers (the "Code").

We have discussed the Statement (including the assumptions and sources of
information referred to therein), with the New Executive Board and those
officers and employees of TUI Travel who developed the underlying plans.
The Statement is subject to uncertainty as described in this announcement
and our work did not involve an independent examination of any of the
financial or other information underlying the Statement.

We have relied upon the accuracy and completeness of all the financial and
other information provided to us by TUI AG and/or TUI Travel, or otherwise
discussed with us, and we have assumed such accuracy and completeness for
the purposes of providing this letter.

We do not express any opinion as to the achievability of the quantified
financial benefits identified by the New Executive Board.

We have also reviewed the work carried out by PricewaterhouseCoopers LLP
and have discussed with them the opinion set out in Part B of Appendix V of
this announcement addressed to yourselves and ourselves on this matter.

This letter is provided to you solely in connection with Rule 28.1(a)(ii)
of the Code and for no other purpose.  We accept no responsibility to TUI
Travel or its shareholders or any person other than the Independent
Directors of TUI Travel in respect of the contents of this letter; no
person other than the Independent Directors of TUI Travel can rely on the
contents of this letter and to the fullest extent permitted by law, we
exclude all liability to any other person, in respect of this letter or the
work undertaken in connection with this letter.

On the basis of the foregoing, we consider that the Statement, for which
those of you who are members of the New Executive Board are responsible,
has been prepared with due care and consideration.

Yours faithfully,

Lazard & Co., Limited
 
APPENDIX VI

DEFINITIONS AND GLOSSARY

The following definitions apply throughout this announcement unless the
context otherwise requires:

<pre>

Accommo-  the Accommodation & Destinations sector of TUI Travel, a global
dation &  provider of accommodation and inbound travel services;
Destina-
tions
Authori-  all authorisations, orders, grants, recognitions, confirmations,
sations   licences, consents, clearances, permissions and approvals;
Bank of   Merrill Lynch International, a subsidiary of Bank of America
America   Corporation
Merrill
Lynch
Barclays  Barclays Bank PLC, acting through its investment bank
Business  a day, not being a public holiday, Saturday or Sunday, on which
Day       banks in London and Frankfurt are open for normal business;
CMA       a reference, pursuant to section 22 and 33 of the Enterprise Act
Phase 2   2002, of the Merger or any part of it to the Chair of the
Reference Competition and Markets Authority for the constitution of a group
          under Schedule 4 to the Enterprise and Regulatory Reform Act
2013;
Code or   the City Code on Takeovers and Mergers in the UK;
UK
Takeover
Code
Combined  TUI AG and its subsidiary undertakings (including TUI Travel and
Group     its subsidiary undertakings) following the Merger;
Complet-  completion of the Merger in accordance with its terms;
ion
Conditi-  the conditions to Completion (including the Scheme becoming
ons       Effective) as set out in Appendix I to this announcement and to
          be set out in the Scheme Document;
Conditi-  the conditional capital increase of TUI AG pursuant to section
onal      192 German Stock Corporation Act (Aktiengesetz - AktG);
Capital
Increase
Contain-  the container shipping business of Hapag-Lloyd AG;
er
Shipping
Convert-  TUI Travel Shares issued following the conversion of TUI Travel
ed Shares Convertible Bonds;
Court     the High Court of Justice in England and Wales;
Court     the order of the Court (i) sanctioning the Scheme under Part 26
Order     of the UK Companies Act and (ii) confirming the associated
          Reduction of Capital under section 648 of the UK Companies Act;
CREST     the relevant system to facilitate the transfer of title to shares
          in uncertificated form (as defined in the CREST Regulations) in
          respect of which Euroclear is the Operator (as defined in the
          CREST Regulations);
CREST     the UK Uncertificated Securities Regulations 2001 (S.I. 2001 No.
Regulat-  3755);
ions
Dealing   has the same meaning as in Rule 8 of the Code;
Disclos-
ure
Deposit-  Capita IRG Trustees Limited, in its capacity as depositary in
ary       respect of the TUI AG Depositary Interests;
Deutsche  Deutsche Bank AG or, as applicable, any of its subsidiary
Bank      undertakings or branches;
Disclosed the information which has been fairly disclosed by TUI Travel or
          TUI AG (as the case may be): (a) in writing prior to 5pm on 12
          September 2014 by it or on its behalf or by its respective
          financial, accounting, tax or legal advisers (specifically as
          advisers in relation to the Merger); (b) in their published
          annual and/or half year report and accounts and/or published
          quarterly trading update for the relevant financial period or
          periods referred to in the relevant Condition; (c) in a public
          announcement made in accordance with the Disclosure and
          Transparency Rules of the FCA prior to 5pm on 12 September 2014;
          or (d) in a public announcement made in accordance with the
          German Securities Trading Act prior to 5pm on 12 September 2014;
          or (e) in this announcement;
Direct    the capital increase of TUI AG pursuant to section 182 of the
Capital   German Stock Corporation Act (Aktiengesetz);
Increase
EBITA     earnings before interest, taxation and amortisation;
Effective the Scheme having become effective pursuant to its terms, or if
          the Merger is implemented by way of a Merger Offer, the Merger
          Offer having been declared unconditional in all respects in
          accordance with the requirements of the Code;
EU        Council Regulation (EC) No. 139/2004 of 20 January 2004 on the
Merger    control of concentrations between undertakings;
Regulat-
ion
Exchange  0.399 New TUI AG Shares for each TUI Travel Share held by a TUI
Ratio     Travel Scheme Shareholder at the Scheme Record Time;
Excluded  any TUI Travel Shares: (i) beneficially owned by TUI AG or any
Shares    other member of the TUI AG Group; or (ii) held by TUI Travel in
          treasury; or (iii) in respect of which TUI AG controls the voting
          rights;
Executi-  has the same meaning as Vorstand in the German Stock Corporation
ve Board  Act (Aktiengesetz) who, for the purposes of this announcement,
of TUI AG comprise Friedrich Joussen and Horst Baier;
Forms of  the form of proxy in connection with each of the TUI Travel Court
Proxy     Meeting and the TUI Travel General Meeting, which shall accompany
          the Scheme Document;
Frankfu-  the Frankfurter Wertpapierbörse;
rt Stock
Exchange
FSMA      the UK Financial Services and Markets Act 2000, as amended;
German    the German Corporate Governance Code (the current version of
Corpora-  which was published on 10 June 2013 in the German Federal
te        Gazette);
Governa-
nce Code
German    the Act on the Drawing up, Approval and Publication of the
Securit-  Prospectus to be Published when Securities are Offered to the
ies       Public or Admitted to Trading on an Organised Market
Prospec-  (Wertpapierprospektgesetz (WpPG));
tus Act
Greenhill Greenhill & Co. Europe LLP;
Hapag-    a container shipping company in which TUI AG holds a 22.04%
Lloyd AG  indirect equity stake;
Hapag-    the cruise business which is wholly owned by TUI AG  and which
Lloyd     has a leading position in the German-speaking market with its
Kreuzfa-  fleet in the luxury and expedition cruise segments;
hrten
Inbound   one of the business lines of the Accommodation & Destinations
Services  sector, primarily providing destination management services (such
          as transfers, excursions and tours) to the travel industry and
          directly to the customer;
Indepen-  those members of the board of directors of TUI Travel who are not
dent      members of the Executive Board of TUI AG nor members of the
Directo-  senior management of TUI AG being, Sir Michael Hodgkinson,
rs of     Valerie Gooding, Janis Kong, Johan Lundgren, Coline McConville,
TUI       Minnow Powell, Dr Erhard Schipporeit, Dr Albert Schunk, Harold
Travel    Sher, and William Waggott;
Integra-  a committee within the Supervisory Board of TUI AG to monitor the
tion      Merger and its implementation;
Committee
J.P.      J.P. Morgan Limited;
Morgan
Lazard    Lazard & Co., Limited;
Listing   means the listing rules produced by the FCA under Part VI of
Rules     FSMA, as amended from time to time;
London    the London Stock Exchange plc, or its successor from time to
time;
Stock
Exchange
Magic     a group of companies acquired by TUI Travel from TUI AG in 2011,
Life      which operate and lease holiday clubs in Turkey, Tunisia, Egypt,
          Greece and Spain;
Mainstr-  the largest TUI Travel sector, comprising leading tour operators
eam       in several source markets, the largest being the UK and Ireland,
          Germany, the Nordic region and France;
Merger    the merger of TUI AG and TUI Travel to be implemented by way of
          the Scheme (or otherwise by way of Merger Offer);
Merger    the implementation of the Merger by means of a takeover offer
Offer     under section 974 of the UK Companies Act, rather than by means
          of the Scheme;
New       the Executive Board (Vorstand) of TUI AG as it is proposed to be
Executi-  constituted immediately after Completion, comprising Friedrich
ve Board  Joussen, Peter Long, Horst Baier, Johan Lundgren, Sebastian Ebel
of TUI AG and William Waggott;
New TUI   the new TUI AG Shares to be issued as consideration pursuant to
AG Shares the Merger;
New TUI   the new TUI Travel Shares to be issued to TUI AG to be issued
Travel    pursuant to the Scheme;
Shares
Offer     as defined in the Code;
Period
Official  the list maintained by the Financial Conduct Authority (acting in
List      its capacity as the UK Listing Authority) in accordance with
          Section 74(1) of the Financial Services and Markets Act 2000 (the
          Act) for the purposes of Part VI of the Act;
Online    one of the business lines of the Accommodation & Destinations
Accommo-  sector, comprising Accommodation Wholesaler and Accommodation
dation    Online Travel Agent (OTA) businesses;
Opening   has the same meaning as in Rule 8 of the Code;
Position
Disclos-
ure
Panel     the UK Panel on Takeovers and Mergers;
PwC       PricewaterhouseCoopers LLP;
Quantif-  quantified financial benefits outlined in the Quantified
ied       Financial Benefits Statements;
Financi-
al
Benefits
Quantif-  together, the Reconfirmed Quantified Financial Benefits
ied       Statements and the Inbound Services Financial Benefits Statement;
Financi-
al
Benefits
Stateme-
nts
Reducti-  the proposed reduction of TUI Travel's share capital in
on of     connection with the Scheme by the cancellation of the TUI Travel
Capital   Scheme Shares pursuant to section 641 of the UK Companies Act;
Registr-  the Registrar of Companies in England and Wales;
ar of
Companies
Restric-  any jurisdiction where local laws or regulations may result in
ted       significant risk of civil, regulatory or criminal exposure if
Jurisdi-  information concerning the Merger is sent or made available to
ction     TUI Travel Shareholders in that jurisdiction (in accordance with
          Rule 30.3 of the Code);
Scheme    the scheme of arrangement proposed to be made under Part 26 of
of        the UK Companies Act between TUI Travel and the TUI Travel Scheme
Arrange-  Shareholders, with or subject to any modification, addition or
ment or   condition approved or imposed by the Court and agreed to by the
Scheme    TUI Travel and TUI AG;
Scheme    the hearing by the Court of the petition to sanction the Scheme
Court     under section 899 of the UK Companies Act and to confirm the
Hearing   associated Reduction of Capital;
Scheme    the document to be despatched to TUI Travel Shareholders
Document  including the particulars required by section 897 of the UK
          Companies Act;
Scheme    the date on with the Scheme becomes effective;
Effecti-
ve Date
Scheme    the time and date specified in the Scheme Document, expected to
Record    be 6.00 p.m. (London time) on the business day immediately prior
Time      to the date of the Scheme Court Hearing;
Signifi-  in relation to an undertaking, a direct or indirect interest of
cant      20% or more of the total voting rights conferred by the equity
Interest  share capital (as defined in section 548 of the UK Companies Act)
          of such undertaking;
Special   the special resolution to be proposed by TUI Travel at the TUI
Resolut-  Travel General Meeting in connection with, amongst other things,
ion       the approval of the Reduction of Capital, the alteration of the
          TUI Travel Articles and such other matters as may be necessary to
          implement the Scheme;
Special-  one of the sectors of TUI Travel, comprising over 90 global
ist &     travel businesses to fulfil the holiday and travel needs of
Activity  customers with a wide range of interests and passions, whose top
          selling brands include Crystal, Hayes & Jarvis, The Moorings,
          Educational Tours inc, Brightspark and Le Boat;
Stateme-  the statement of capital (approved by the Court) showing, with
nt of     respect to TUI Travel's share capital, as altered by the Court
Capital   Order, the information required by section 649 of the UK
          Companies Act;
Supervi-  has the same meaning as Aufsichtsrat in the German Stock
sory      Corporation Act (Aktiengesetz);
Board
Trust     the trust deed to be entered into between TUI Travel (on behalf
Deed      of the TUI Travel Scheme Shareholders) and the Trustee, under
          which the Trustee will subscribe for, receive, hold and transfer
          the New TUI AG Shares on trust for the TUI Travel Scheme
          Shareholders;
Trustee   Capita IRG Trustees Limited, in its capacity as trustee for the
          TUI Travel Scheme Shareholders under the terms of the Trust Deed;
TUI AG    TUI AG, a company incorporated in Germany whose registered office
          is at Karl-Wiechert-Allee 4, 30625, Hanover, Germany;
TUI AG    the charter of TUI AG;
Charter
TUI AG    depositary interests to be issued on Completion by the Depositary
Deposit-  in respect of the TUI AG Shares, each representing an entitlement
ary       to one TUI AG Share and "TUI AG Depositary Interest" means any
Interests one of them;
TUI AG    the invitation to the TUI AG EGM to be sent to TUI AG
EGM       Shareholders in connection with the Merger;
Invitat-
ion
TUI AG    the general meeting of TUI AG to be convened in connection with
EGM       the Merger, notice of which will be sent out in the TUI AG EGM
          Invitation, including any adjournment thereof;
TUI AG    TUI AG and its subsidiary undertakings, excluding TUI Travel and
Group     its subsidiary undertakings;
TUI AG    a sector within the tourism business of TUI AG, which includes
Hotels &  majority participation in hotels, joint ventures with local
Resorts   partners, companies (where TUI AG holds a financial stake) and
          hotels operated under management contracts;
TUI AG    the prospectus to be published by TUI AG in connection with the
Prospec-  issue of the New TUI AG Shares and the Combined Group containing
tus       information on TUI AG and the New TUI AG Shares required for the
          purposes of the German Securities Prospectus Act;
TUI AG    the share option and incentive schemes operated by the Wider AG
Share     Group, further details of which will be set out in the TUI AG
Plans     Prospectus;
TUI AG    holders of TUI AG Shares (including, following Completion,
Shareho-  holders of TUI AG Depositary Interests);
lders
TUI AG    the shares of no par value in the share capital of TUI AG;
Shares
TUI       TUI Cruises GmbH, a joint venture between TUI AG and Royal
Cruises   Caribbean Cruises Ltd;
TUI       TUI Travel PLC, a company incorporated in England and Wales with
Travel    registered number 6072876;
TUI       the articles of association of TUI Travel;
Travel
Articles
TUI       the following bonds issued by TUI Travel:
Travel    (a) GBP 350,000,000 of convertible bonds with a coupon of 6.0%
due
Convert-  in October 2014, the ISIN of which is XS0455660216; and
ible      (b) GBP 400,000,000 of convertible bonds with a coupon of 4.9%
Bonds     due in April 2017, the ISIN of which is XS0503743949;
TUI       the meeting of the TUI Travel Scheme Shareholders to be convened
Travel    by order of the Court pursuant to Section 896 of the UK Companies
Court     Act, for the purpose of approving the Scheme, including any
Meeting   adjournment thereof;
TUI       the general meeting of TUI Travel Shareholders to be convened in
Travel    connection with the Scheme, for the purposes of approving the
General   Reduction of Capital and certain related matters, including any
Meeting   adjournment thereof;
TUI       the TUI Travel Court Meeting and the TUI Travel General Meeting;
Travel
Meetings
TUI       TUI Travel Shares:
Travel
Scheme    (a)  in issue as at the date of the Scheme Document and which
Shares    remain in issue until the Scheme Record Time;

          (b)  (if any) issued after the date of the Scheme Document and
          prior to the Voting Record Time and which remain in issue until
          the Scheme Record Time; and

          (c)  (if any) issued on or after the Voting Record Time and
before
          the Scheme Record Time on terms that the holder thereof shall be
          bound by the Scheme or in respect of which the original or any
          subsequent holder thereof is or shall have agreed in writing to
be
          bound by the Scheme and, in each case, which remain in issue
until
          the Scheme Record Time;

          but, in each case, except the Excluded Shares;
TUI       holders of TUI Travel Scheme Shares;
Travel
Scheme
Shareho-
lders
TUI       holders of TUI Travel Shares;
Travel
Shareho-
lders
TUI       the share option and incentive plans operated by the Wider PLC
Travel    Group, further details of which will be set out in the Scheme
Share     Document;
Plans
TUI       the fully paid up ordinary shares of 10 pence each in the capital
Travel    of TUI Travel;
Shares
UK        the United Kingdom;
UK        the UK Companies Act 2006, as amended from time to time;
Compani-
es Act
UK        the UK Corporate Governance Code 2012 as amended, supplemented or
Corpora-  replaced from time to time;
te
Governa-
nce Code
UK        the FCA acting for the purposes of Part VI of the FSMA;
Listing
Authority
Unique    holidays which are exclusive to TUI Travel, tailored to the
Holidays  differing needs of its customers, and providing value-added
          services and features;
United    the United States of America, its territories and possessions,
States    any state of the United States of America, the District of
or US     Columbia, and all other areas subject to its jurisdiction;
US        the US Securities Exchange Act of 1934, as amended;
Exchange
Act
US        the US Securities Act of 1933, as amended;
Securit-
ies Act
US$       United States dollars;
Voting    the time and date specified in the Scheme Document by reference
Record    to which entitlement to vote on the Scheme will be determined;
Time
Wider AG  TUI AG and its subsidiaries, subsidiary undertakings, associated
Group     undertakings and any other body corporate, partnership, joint
          venture or person in which TUI AG and all such undertakings
          (aggregating their interests) have a Significant Interest (other
          than any member of the Wider PLC Group);
Wider     TUI Travel and its subsidiaries, subsidiary undertakings,
PLC Group associated undertakings and any other body corporate,
          partnership, joint venture or person in which TUI Travel and all
          such undertakings (aggregating their interests) have a
          Significant Interest; and
EUR or    Euros, the lawful currency for the time being of the European
euro      Monetary Union.


</pre>

For the purposes of this announcement, "subsidiary", "subsidiary
undertaking", "undertaking" and "associated undertaking" have the
respective meanings given by the UK Companies Act.

References to an enactment include references to that enactment as amended,
replaced, consolidated or re-enacted by or under any other enactment before
or after the date of this announcement. All references to time in this
announcement are to London time unless otherwise stated.

 1) See Bases and Sources in Appendix II for more information. No statement
in this announcement is intended as a profit forecast or estimate for any
period and no statement in this announcement should be interpreted to mean
that earnings or earnings per share for TUI AG or TUI Travel, as
appropriate, for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
TUI AG or TUI Travel, as appropriate.
  2) Based on the Combined Group's tax calculations for the financial year
2012/13 a cash tax benefit of EUR35 million (£28 million) would have been
achieved had the two businesses been combined in that year.
  3)See Bases and Sources in Appendix II for more information. No statement
in this announcement is intended as a profit forecast or estimate for any
period and no statement in this announcement should be interpreted to mean
that earnings or earnings per share for TUI AG or TUI Travel, as
appropriate, for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
TUI AG or TUI Travel, as appropriate.
  4)TUI Travel's vertically integrated Magic Life clubs have a current
occupancy level of 85% in the financial year 2013/14 compared to 80% in TUI
AG's hotel and resorts portfolio for the financial year 2012/13.
 5) These additional cost savings could have been achieved on a standalone
basis by TUI Travel.
  6)See Bases and Sources in Appendix II for more information.
  7)No statement in this announcement is intended as a profit forecast or
estimate for any period and no statement in this announcement should be
interpreted to mean that earnings or earnings per share for TUI AG or TUI
Travel, as appropriate, for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings
per share for TUI AG or TUI Travel, as appropriate.
  8)Before implementation costs of the Merger are accounted for.

  9)See Bases and Sources in Appendix II for more information. No statement
in this announcement is intended as a profit forecast or estimate for any
period and no statement in this announcement should be interpreted to mean
that earnings or earnings per share for TUI AG or TUI Travel, as
appropriate, for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
TUI AG or TUI Travel, as appropriate.
 10) This statement should not be construed as a forecast of the tax
benefits achievable as a result of the Merger or interpreted to mean that
potential benefits to the Combined Group's earnings in the first full
financial year following the Merger, or in any subsequent period, would
necessarily match or be greater than or be less than those of TUI AG and/or
TUI Travel for the relevant preceding financial period or any other period.
The achievement of such a saving is reliant on the Combined Group
continuing to achieve sufficient taxable profits in the German
jurisdiction.
 11) The underlying effective tax rate of the Combined Group for the
financial year 2012/13 is calculated based on the underlying profit before
tax (excluding separately disclosed items, acquisition related expenses and
impairment charges).
  12)Occupancy of Magic Life clubs portfolio excluding clubs in Egypt.
  13)See Bases and Sources in Appendix II for more information. No
statement in this announcement is intended as a profit forecast or estimate
for any period and no statement in this announcement should be interpreted
to mean that earnings or earnings per share for TUI AG or TUI Travel, as
appropriate, for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share for
TUI AG or TUI Travel, as appropriate.
  14)Pounds sterling figures in this paragraph are converted into euro
figures at the exchange rate set out in Appendix II and otherwise used
throughout this announcement. The Mainstream figure includes euro figures
for TUI AG Hotels & Resorts and TUI Cruises converted into pounds sterling
using the historical average exchange rate for the financial year 2012/13
of EUR1.00:£0.84.
 15) See Bases and Sources in Appendix II for more information.
  16)This statement should not be construed as a forecast of the tax
benefits achievable as a result of the Merger or interpreted to mean that
potential benefits to the Combined Group's earnings in the first full
financial year following the Merger, or in any subsequent period, would
necessarily match or be greater than or be less than those of TUI AG and/or
TUI Travel for the relevant preceding financial period or any other period.
The achievement of such a saving is reliant on the Combined Group
continuing to achieve sufficient taxable profits in the German
jurisdiction.
  17)No statement in this announcement is intended as a profit forecast or
estimate for any period and no statement in this announcement should be
interpreted to mean that earnings or earnings per share for TUI AG or TUI
Travel, as appropriate, for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings
per share for TUI AG or TUI Travel, as appropriate.
  18)Before implementation costs of the Merger are accounted for.
  19)Investors in any doubt about their taxation position must consult
their own professional advisers (including legal and/or taxation advisers)
and no statement in this announcement constitutes or shall be deemed to
constitute legal or taxation advice.


Contact:
Investor Relations:
Nicola Gehrt, phone +49 (0) 511 566 1435
Ina Klose, phone +49 (0) 511 566 1318

Press:
Michael Röll, phone +49 (0) 511 566 6020
Kuzey Alexander Esener, phone +49 (0) 511 566 6024


15.09.2014 The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language:     English
Company:      TUI AG
              Karl-Wiechert-Allee 4
              30625 Hannover
              Germany
Phone:        +49 (0)511 566-00
Fax:          +49 (0)511 566-1901
E-mail:       Investor.Relations@tui.com
Internet:     www.tui-group.com
ISIN:         DE000TUAG000, DE000TUAG059,, DE000TUAG117,, DE000TUAG158
WKN:          TUAG00  , TUAG05,, TUAG11,, TUAG15
Indices:      M-DAX
Listed:       Regulierter Markt in Berlin, Düsseldorf, Frankfurt (Prime
              Standard), Hamburg, Hannover, München, Stuttgart
 
End of Announcement                             DGAP News-Service
 
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