TUI to sell RIU Hotels stake for €670m
TUI has struck a €670m (£576m) deal to sell its 49% holding in RIU Hotels
TUI has struck a €670m (£576m) deal to sell its 49% holding in RIU Hotels.
The holiday firm said its 49% stake in the RIU hotels joint venture was being sold to Saranja, an entity of RIU Group owned by siblings Carmen and Luis Riu.
Debt reduction
The €670m purchase price, including earn-out, implies an enterprise value of €1.5bn for RIU Hotels, with its real estate portfolio comprising 21 properties.
Subject to regulatory approval, the transaction is on course to complete in late summer 2021. Once completed, TUI will receive €540m, while the remaining value through earn-out will be payable upon RIU Hotels delivering its operating budget for the 2022 and 2023 financial years.
The Germany-headquartered holiday operator will use the proceeds of the sale to reduce its debt pile, which has risen substantially due to the coronavirus pandemic. TUI's net debt stood at €6.8bn as at March 31, an increase of just over €1.9bn from a year ago.
Core strategy
TUI aims to strengthen its core business, focusing on holiday experiences, through the development, operation and marketing of hotel and holiday brands.
“The group intends to grow primarily with its international hotel brands TUI Blue, RIU, Robinson, TUI Magic Life and the management of these hotels, but in doing so will tie up less capital in property and real estate in the future,” said TUI.
Despite the deal, TUI and RIU will continue to jointly manage 100 other hotels and resorts worldwide.
TUI reported a net loss of €1.5bn (£1.3bn) for the six months to the end of March as coronavirus travel restrictions continued to weigh. The shares were at 434p in London on Friday at 12pm, 0.3% firmer. The stock has lost about 55% since the beginning of 2020.