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LONDON (Reuters) - Europe's biggest tour operator, TUI Travel, and majority owner TUI AG agreed the terms of a merger, creating a the world's largest leisure and tourism group with a combined value of 6.5 billion euros (5.17 billion pounds).
The agreement on the terms of the recommended all-share, nil-premium merger comes after the two companies announced they were in talks in June.
The deal is in line with details announced in June with TUI Travel shareholders receiving 0.399 new TUI AG shares for each TUI Travel share.
Investors have long expected a tie-up between the two since TUI Travel was created in 2007 from the merger of Britain's First Choice and the travel business of TUI AG, which now owns around 55 percent of the London-listed firm.
TUI AG's largest shareholder Alexey Mordashov, who owns over 25 percent and has previously pushed for a tie-up between the two to simplify their holding structure, continues to support the deal, the companies said in their statement.
The two confirmed that the deal would result in potential cost savings of at least 45 million euros a year as they cut out overlapping functions and delist shares from Germany, plus a tax benefit.
(Reporting by Sarah Young; editing by Jason Neely and Susan Thomas)