ClickAJob News

British travel company First Choice Holidays has been granted permission by European regulators to merge with the German group TUI, the owner of Thomson Holidays.

The European Commission said yesterday that it had authorised the tie-up on the condition that TUI disposed of its Irish brand, Budget Travel.

TUI agreed to sell the business after the commission concluded that a deal including Budget Travel would "raise serious competition concerns" in Ireland and give First Choice and its merger partner control of more than 50 per cent of the market for short-haul package breaks.

"In light of this commitment, the commission has concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it," the commission said in a statement.

First Choice and TUI plan to merge to create TUI Travel, which will be based in London. The new group is expected to achieve annual sales totaling £12 billion and a customer base of around 27 million.

Shares in the company are expected to be publicly listed by October 1st.

The proposed merger comes as travel companies are increasingly looking to consolidate their operations in the wake of the growing trend for consumers to use the internet to book holidays independently of travel agents.

In May German-owned Thomas Cook won permission from the European Commission to buy British package holiday provider MyTravel.

Welcoming the latest decision by EU regulators to approve a tie-up in the travel industry, First Choice chief executive Peter Long said: "We are pleased that the commission has recognised the sea-change in the leisure travel industry brought about by internet-based travel and tourism businesses and the low cost airlines.

"We will now be able to press forward with the merger process and the creation of TUI Travel PLC, which will offer great value holidays and leisure travel experiences for our customers."

TUI chief executive Dr Michael Frenzel said the approval marked "the first step on the path to creating a world leading leisure travel group".