Non-binding translation from German

Transcription

1 Non-binding translation from German Executive Board Report on Items 1, 2 and 3 of the Agenda for the Extraordinary General Meeting of TUI AG of 28 October 2014 including the Report Pursuant to Section 186 (4) AktG on Agenda Item 1, the Report on Agenda Item 2 and the Report Pursuant to Sections 203 (2), 186 (4) AktG on Agenda Item 3 1. PREAMBLE On 27 June 2014, TUI AG with its registered offices in Berlin and Hanover, Germany, ("TUI AG") reached a general agreement with TUI Travel PLC (represented by its independent directors) with its registered office in Crawley, United Kingdom, ("TUI Travel") on the key terms of a proposed merger by way of an all-share nil premium merger (the "Merger") and announced this in an ad hoc notification of the same date. Final agreement then reached on the terms of the Merger recommended to the shareholders was announced and set out in more detail on 15 September 2014 in another ad hoc notification. The resolution proposed to the extraordinary general meeting of TUI AG on 28 October 2014 (the "TUI Extraordinary General Meeting") under agenda item 1 concerning the share capital increase against contributions in kind by up to EUR 683,265, subject to an exclusion of statutory subscription rights of the shareholders, the resolution proposed under agenda item 2 concerning the conditional share capital increase against contributions in kind by up to EUR 61,976, and the resolution proposed under agenda item 3 concerning the authorisation to create statutory authorised capital in an amount of EUR 18,000,000 with the option to exclude statutory subscription rights of the shareholders all serve to implement, or prepare for, the Merger of TUI AG and TUI Travel. Against this background, the TUI AG Executive Board combines its reports regarding the three proposed resolutions in one uniform report. The general part of the following report, i.e. the statements contained in 1 and 2 and the statements explaining and substantiating the issue amount in 3, relates to all three agenda items, while the special part in 4 contains the specific report of the Executive Board on the capital measures proposed individually by the Executive Board and the Supervisory Board. 2. BACKGROUND AND DESCRIPTION OF THE MERGER WITH TUI TRAVEL PLC 2.1 Overview (a) TUI AG (i) Company, share capital, shares and registered office TUI AG has its registered offices in Berlin and Hanover and is registered with the commercial register (Handelsregister) of the district court (Amtsgericht) of Berlin- Charlottenburg under HRB 321 and with the commercial register of the district court of Hanover under HRB The business address of TUI AG is: Karl-Wiechert- Allee 4, Hanover, Germany. The share capital of the company amounts to EUR 732,581, and is divided into 286,561,143 no-par value shares with ISIN DE 000 TUA G00 0, ISIN DE 000 TUA G20 8, DE 000 TUA G22 4 and ISIN DE 000 TUA G23 2 (as at 12 September FR:

2 2014). The shares issued by TUI AG are registered shares and are traded in the Regulated Market of the Frankfurt Stock Exchange (Prime Standard segment) as well as on various regional stock exchanges. The shares in TUI AG are listed in the German share index MDAX 50, as well as in a number of sector indices in the German share market, such as the DAXsupersector Industrials and the DAXsector All Transportation & Logistics. (ii) Object of entrepreneurial activity The statutory corporate object of TUI AG is to engage on a commercial basis in tourism and shipping (including all associated services and project developments), the acquisition of interests in enterprises active in tour operating, commercial air transportation, passenger and freight shipping (in particular container shipping) as well as the container transport business, the hotel industry, the leisure industry and in travel agents as well as other services both in its own facilities or in facilities of affiliated companies, as well as the bundling of affiliated companies under a centralised management. (iii) Group structure TUI AG is the parent company of the TUI Group. It holds direct or indirect interests in numerous subsidiaries and affiliated companies (TUI AG and its subsidiaries and affiliated companies also the "TUI Group"), which conduct the business of the TUI Group in the individual countries. On 30 June 2014, TUI AG's group of consolidated companies comprised a total of 628 direct and indirect subsidiaries, of which 46 were based in Germany and 582 abroad. A further 23 associated companies and 35 joint ventures were included in TUI AG's financial statements on the basis of at-equity measurement. The following chart shows the major subsidiaries and affiliated companies of TUI AG (information on percentage of shareholdings as at 31 August 2014): The most important interest in economic terms held by TUI AG is that in TUI Travel, TUI AG (as at 12 September 2014) is the beneficial owner of 609,120,138 shares (ordinary shares) in the share capital of TUI Travel, which corresponds to beneficial ownership of approx. 54% of the share capital of TUI Travel. In terms of legal and beneficial ownership, the details of the shareholding structure were as follows: the special purpose vehicle Antium Finance FR:

3 Ltd. ("Antium") acquired one half of a convertible bond issued by TUI Travel in 2010 (the "TUI Travel 2017 Bonds"; for details see 2.2). In this context it was agreed that Antium should convert shares in a number that is at all times equivalent to the number of shares received by holders or creditors of the TUI Travel 2017 Bonds as a result of exercise of their conversion rights. In 2013 the arrangement was amended so that DB Nominees Limited (an affiliate within Deutsche Bank Group) took ownership of the relevant TUI Travel Shares and TUI Travel 2017 Bonds in place of Antium. TUI AG has a right to issue directions to DB Nominees Limited as regards the voting rights attached to the shares in TUI Travel held by DB Nominees Limited, and TUI AG is also entitled to the corresponding dividends. TUI AG therefore controls the TUI Travel Shares held by DB Nominees Limited. TUI AG also holds a stake of around 22% in the share capital of Hapag-Lloyd AG, a Hamburg-based company active in container shipping; TUI AG intends to sell this stake. (iv) Business operations The business divisions of the TUI Group comprising the core business are divided into three sectors: TUI Travel (travel services), TUI Hotels & Resorts (hotel business) and Cruises (Hapag-Lloyd Kreuzfahrten/TUI Cruises). (A) TUI Travel (travel services) The travel services are mainly offered under the TUI brand by TUI Travel, the company involved in the Merger. Mainstream The Mainstream business is the largest business unit within the travel services business conducted by TUI Travel, covering all activities in the package tour segment from sales of tours via tour operating all the way to flight operations in particular in Germany, the United Kingdom, the Nordic countries, Belgium, the Netherlands and France. The TUI operators hold leading market positions in Europe. Their portfolio comprises the sale of flights, accommodation and other tourism services, both as package tours and as separate components. Apart from the tour operators, this business unit also comprises a fleet of over 140 aircraft and around 1,800 travel agencies. It is made up of several integrated tourism groups, each with a focus on a specific source market. Thanks to its extensive presence in the market and its strong brands, TUI Travel achieves high customer loyalty. As it modernises the Mainstream business model, TUI Travel focuses on increasing the share of unique and differentiated products offering added value to customers beyond pure travel and accommodation services. At the same time, it is intended to successively increase the proportion of group-owned tour operator products through channels owned by the tour operators. Due to its broad customer base, TUI Travel is able to balance out uneven development in individual markets or product groups. Moreover, TUI Travel pursues flexible capacity management in its Mainstream business, with only a small proportion of its airline and hotel commitments FR:

4 subject to fixed contracts. The flight capacity of its own airlines is primarily geared to the needs of the tour operators. Accommodation & Destinations The Accommodation & Destinations Sector (A&D) is a global provider of travel services through two business lines: Online Accommodation and Inbound Services. Online Accommodation includes the Accommodation Wholesaler business (Hotelbeds and Bedsonline), a global market leader in the B2B space, supplying hotels online to the leisure travel industry. The Accommodation Online Travel Agent (OTA) business sells accommodation direct to the end consumer through the brands LateRooms.com in the United Kingdom, AsiaRooms.com in Asia Pacific and MalaPronta.com in Brazil. Inbound Services is a global network of Destination Management Companies (DMCs), a global cruise handling specialist and a meetings and events specialist. These businesses provide travel services to tour operators, travel agents, corporate clients and direct to the consumer worldwide. Specialist & Activity In addition, TUI Travel operates the Specialist & Activity Business, which pools more than 90 brands of specialist and adventure tour operators in Europe, North America and Australia. It operates through six divisions: Adventure, Education, Marine, North American Specialist, Sport and Specialist Holidays Group. It includes tour operators offering marketleading travel experiences and adventures, tour operators for student trips and language courses, providers of charter yachts, premium suppliers and providers of skiing and other sporting tours. (B) TUI Hotels & Resorts (hotel business) The TUI Hotels & Resorts sector includes 100% participations in hotels, joint ventures with local partners and companies where TUI holds a financial stake enabling it to exert a strong influence, as well as hotels operated under management contracts. As the link between tour operators and hotel partners, the hotel business led by TUI AG ensures the strong positioning of the hotel brands within the TUI Group and among the competition. Apart from strategic planning, pioneering new hotel formats and providing operative support, this sector also coordinates the marketing and distribution activities and the environmental and social measures undertaken by the hotel companies. (C) Cruises (Hapag-Lloyd Kreuzfahrten/TUI Cruises) The third sector of the TUI Group is formed by the Cruises business operated by Hapag-Lloyd Kreuzfahrten GmbH and TUI Cruises GmbH for the TUI Group. Hamburg-based Hapag-Lloyd Kreuzfahrten operates cruise ships mainly in the German-speaking market for luxury and expedition cruises. In May 2013, the portfolio in the luxury cruise segment was further expanded with the commissioning of the new Europa 2. The Columbus 2, a vessel previously chartered, was removed from the fleet in April The flagships are the five-star-plus vessels Europa and Europa 2. They were FR:

5 awarded this category by the Berlitz Cruise Guide and are the world's only ships awarded this category, in the case of Europa for the fourteenth time in succession. The Europe primarily cruises on world tours, while her sister ship Europa 2 takes shorter but combinable routes. The Hanseatic is used, among other things, for expedition cruises to the Arctic and Antarctic. It is the world's only five-star passenger vessel with the highest Arctic class. The Bremen, a four-star vessel also awarded the highest Arctic class is another expedition ship travelling to similar destinations. Two of the ships are owned by Hapag-Lloyd Kreuzfahrten and two are chartered. TUI Cruises is a joint venture formed in 2008 between TUI AG and the US shipping company Royal Caribbean Cruises Ltd., in which each partner holds a 50% stake. The Hamburg-based company offers cruises for the German-speaking premium market. TUI Cruises follows a concept primarily aimed at couples and families who attach particular importance to personal choice, spaciousness, quality and service on a cruise. TUI Cruises currently serves this market with three ships, Mein Schiff 1, Mein Schiff 2 and Mein Schiff 3, the latter being a new vessel commissioned in June The position of TUI Cruises is to be further strengthened by the commissioning of another new vessel which is planned for mid (v) Key financial information for the current financial year 2013/2014 In its last financial year 2012/13, the TUI Group generated (consolidated) turnover of approx. EUR 18,478 million and reported EBITA of approx. EUR 595 million. Compared to financial year 2011/12 this marked an increase in turnover of 0.8% and in reported EBITA of approx. 10.4%. For the period from 1 October 2013 to 30 June 2014, i.e. in the first nine months of the current financial year 2013/14, the key financial data of the TUI Group were as follows: Development of turnover: Turnover by divisions and sectors for the period from 1 October 2013 to 30 June 2014 EUR million Q3 2012/13 Q3 2013/14 Var. % 9M 2012/13 9M 2013/14 Var. % Tourism 4, , , , TUI Travel 4, , , , TUI Hotels & Resorts Cruises Central Operations Total 4, , , , As these figures show, turnover for the first nine months of the current financial year 2013/14 was approx. EUR 11,384 million, i.e. approx. 1.2% below the previous year's figure; adjusted for currency conversion effects it fell by 0.7%. The development of underlying EBITA of the TUI Group was as shown below (the underlying EBITA was adjusted for gains on disposal of FR:

6 Underlying EBITA TUI Group investments, expenses incurred during restructuring measures, largely expected amortisation of intangible assets from purchase price allocations and other expenses for and income from one-off items): EUR million Q3 2012/13 Q3 2013/14 Var. % 9M 2012/13 9M 2013/14 Var. % EBITA Gains on disposal Restructuring Purchase Price Allocation Other one-off items Underlying EBITA As these figures show, in the third quarter of the current financial year 2013/14 the TUI Group's underlying EBITA rose by EUR 76.9 million year-on-year to EUR million. In cumulative figures for the first nine months of the current financial year 2013/14, the seasonal loss (underlying EBITA) of the TUI Group fell by EUR 69.9 million to EUR million. In the first nine months of the current financial year 2013/14, adjustments had to be made for net expenses of EUR 66.1 million in aggregate (previous year: net expenses of EUR million). Besides expenses from purchase price allocations, this included in particular restructuring costs at TUI Travel as well as net one-off costs incurred in particular in connection with the subsequent payment of margin VAT (Margenumsatzsteuer) that TUI Travel had to make for preceding years as a result of a changed legal assessment, which were partly offset by earnings from the reduction of pension obligations at TUI Travel. EBITA as reported for the first nine months of the current financial year 2013/14, which was negative owing to seasonal influences, was EUR million, and thus EUR million up year-on-year. (vi) Employees As at 30 June 2014, the TUI Group had 77,027 employees. (b) TUI Travel PLC (i) Company, share capital, shares and registered office TUI Travel PLC with its registered office in Crawley, United Kingdom, is registered at Companies House under number The company was formed by way of a merger of the tourism sector of TUI AG (without the hotels and cruises businesses) with the UK enterprise First Choice Holidays PLC, which was completed in The business address of TUI Travel is: Fleming Way, Crawley, West Sussex, RH10 9QL, United Kingdom. The company's share capital is GBP 113,384, and is divided into 1,133,842,328 shares (ordinary shares) with a nominal value of GBP 0.10 per share and ISIN GB00B1Z7RQ77 (as at 12 September 2014). The shares are registered shares that are admitted to trading at the London Stock Exchange and are included in the FTSE 100 index as well as in the FTSE4Good indices. TUI AG (as at 12 September 2014) is the beneficial owner or controller of 609,120,138 shares FR:

7 (ordinary shares) in the share capital of TUI Travel, which corresponds to beneficial ownership or control of approx. 54% of the share capital of TUI Travel (see 2.1 (a) above). (ii) Object of entrepreneurial activity TUI Travel provides travel services in various countries and regions worldwide, offering tours and individual tourism services in various segments. (iii) Group structure TUI Travel is a subsidiary of TUI AG. TUI AG holds approx. 54% of the voting rights in TUI Travel; TUI AG is also entitled to a corresponding portion of the dividends distributed by TUI Travel. TUI Travel itself directly or indirectly holds interests in numerous subsidiaries and affiliated companies (TUI Travel and its subsidiaries and affiliated companies also the "TUI Travel Group"). The following chart shows the major subsidiaries and affiliated companies of TUI Travel: (iv) Business operations The TUI Travel Group operates in around 180 countries worldwide, serving around 30 million customers from 31 source markets. Its business is divided into the three business units Mainstream, Specialist & Activity and Accommodation & Destinations, which have been described above in the connection with the business activities of TUI AG; reference is made to this description (see 2.1 (a) above). (v) Key financial information for the current financial year 2013/14 According to the segment reporting of TUI AG, the TUI Travel Group generated (consolidated) turnover of approx. EUR 17,796 million and reported EBITA of approx. EUR 533 million in its last financial year 2012/13. Compared to financial FR:

8 year 2011/12 this marked an increase in turnover of approx. 0.7% (2.0% after adjustment for currency conversion effects) and in reported EBITA of approx. 20.8%. For the period from 1 October 2013 to 30 June 2014, i.e. the first nine months of the current financial year 2013/14, the key financial data of the TUI Travel Group were as follows: TUI Travel Key figures EUR million Q3 2012/13 Q3 2013/14 Var. % 9M 2012/13 9M 2013/14 Var. % Turnover +4, , , , EBITA Gains on disposal Restructuring Purchase Price Allocation Other one-off items Underlying EBITA In the third quarter of the current financial year 2013/14, the TUI Travel Group realised growth in turnover of approx. 2.8% year-on-year, or approx. 1.9% after adjustment for currency conversion effects. The 1.1% decrease in turnover (after adjustment for currency conversion effects) in the first nine months of the current financial year 2013/14 was in particular due to the significant capacity reductions at TUI France. Underlying EBITA of the TUI Travel Group rose by EUR 55.3 million to EUR million in the third quarter of the current financial year 2013/14 as compared to the same period of the previous year. The seasonal loss (underlying EBITA) in the first nine months of the current financial year 2013/14 decreased by EUR 42.4 million to EUR million. In the first nine months of the current financial year 2013/14, the TUI Travel Group had to make adjustments for net expenses of EUR 81.5 million in aggregate (previous year: net expenses of EUR 56.2 million). The TUI Travel Group's EBITA as reported for the first nine months of the current financial year 2013/14, which was negative owing to seasonal influences, rose by EUR 17.1 million to EUR million year-on-year. (vi) Employees 2.2 Structure of the Merger As at 30 June 2014, the TUI Travel Group had 62,369 employees. The Merger of TUI AG and TUI Travel is to be effected in the form of an all-share nil premium merger. To this end, the shares of all present and future shareholders of TUI Travel not yet legally or beneficially owned by or attributed to TUI AG are to be contributed to TUI AG, with new shares in TUI AG being issued as consideration that are to be created by way or on the basis of the capital measures proposed to the TUI Extraordinary General Meeting. Additional consideration above and beyond this is not be granted. TUI AG has already reported in detail about the structure of the Merger recommended to the shareholders in the ad hoc notice as of 15 September FR:

9 The elements of the envisaged structure for the Merger as reflected in the resolution proposals for the TUI Extraordinary General Meeting are as follows (for details on the structuring of the proposed capital increase resolutions see 4. below): (a) Capital increase against contributions in kind subject to exclusion of statutory subscription rights of TUI AG shareholders for the purpose of acquiring the TUI Travel Scheme Shares Following the passing of corresponding resolutions with the required majority by the shareholders of TUI Travel entitled to vote, the shares in TUI Travel will be cancelled by TUI Travel on the basis of a Scheme of Arrangement under the UK Companies Act 2006 to be approved by the High Court of Justice of England and Wales (the "Court") (the "Scheme") (the "Scheme Shares" and their holders the "Eligible TUI Travel Shareholders"). The Scheme is an instrument provided for in the UK Companies Act 2006 which, once it has taken effect, will be binding on the holders of shares in TUI Travel that were issued before the Scheme Record Time (see below for details). In particular, amongst other conditions, in order for the Scheme to become effective: It must be approved by a majority in number of the TUI Travel shareholders, 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; A 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 regarding the capital increase proposed under item 1 of the agenda and the conditional capital increase proposed under item 2 of the agenda (each requiring a majority of at least three quarters of the share capital voting on such resolution) must be passed at the TUI Extraordinary General Meeting; The resolution of the capital increase proposed under item 1 and the resolution of the conditional capital increase proposed under item 2 must be registered at the commercial registries in Hanover and Charlottenburg/Berlin; The Court must sanction and confirm the Scheme with or without modification (but subject to any such modification being acceptable to TUI AG and TUI Travel) and the reduction of capital; 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. 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 FR:

10 by TUI Travel shareholders. TUI Travel will send the Scheme document to TUI Travel shareholders as soon as reasonably practicable. It is expected that, subject to the decision of the Court, the TUI Travel court meeting will be held on or around 28 October The TUI Travel general meeting is expected to be held on the same day following the close of the TUI Travel court meeting. Scheme Shares are all of the shares in TUI Travel issued prior to the Scheme Record Time, except for shares in TUI Travel held by TUI AG itself or by a company in which TUI AG holds a controlling or majority interest or in respect of which TUI AG or a company in which TUI AG holds a controlling or majority interest may control the attached voting rights (on the basis of a power of attorney or power to issue instructions or otherwise). The Scheme Record Time is 6 p.m. London time (7 p.m. CET or CEST, respectively) of the business day (in Frankfurt am Main, Germany, and in London, United Kingdom) immediately preceding the day on which the Court sanctions the Scheme and confirms the reduction of the share capital of TUI Travel envisaged under the Scheme. As consideration for the cancellation of the Scheme Shares TUI Travel will issue new shares (in the same number as the cancelled Scheme Shares) in accordance with the Scheme from the reserves arising in the book of account of TUI Travel from the cancellation of the Scheme Shares, which new shares will be contributed to TUI AG as contribution in kind in the context of the capital increase proposed on the basis of the resolution proposed under agenda item 1 of the TUI Extraordinary General Meeting. Accordingly, the contribution in kind comprises those shares in TUI Travel that are newly created as consideration for the cancellation of the Scheme Shares (in the same number as the cancelled Scheme Shares) in accordance with the Scheme and which correspond to the Scheme Shares with regard to the rights granted to their holder (ordinary shares) and to the amount of share capital represented by each share (GBP 0.10) (the "New TUI Travel Shares"). In return for the contribution of the New TUI Travel Shares, shares in TUI AG will be issued at the lowest issue amount within the meaning of section 9 (1) of the German Stock Corporation Act (Aktiengesetz; "AktG") (approx. EUR 2.56 per New Share), which will carry dividend rights for the first time for the entire year in which they are created, which is expected to be the financial year commencing on 1 October 2014 (the "New Shares I"). The New Shares I will be issued at a rate of 0.399: This means that for each New Share I 1/0.399, i.e. approx , New TUI Travel Shares are contributed by way of contribution in kind. However, no fractions of New Shares I will be issued. Therefore, the number of New Shares I issued in exchange for New TUI Travel Shares will be rounded down to the nearest full number of New Shares I, with no compensation being provided by TUI AG for the contributed New TUI Travel Shares or fractions of New TUI Travel Shares that are not covered by a fraction of a New Share I due to rounding down at an ratio of 0.399: Only Capita IRG Trustees Limited, a company incorporated under the laws of England and Wales, registered at Companies House under number and with its registered office in Beckenham, Kent, United Kingdom, (the "Trustee") is to be admitted for subscription to the New Shares I. This company acts in its own name, but as Trustee for the Eligible TUI Travel Shareholders subject to the undertaking to use the acquired shares in accordance with the Scheme and in the interest of the TUI Travel shareholders without acquiring beneficial ownership thereto. The Trustee s obligation to make a contribution in kind may (in whole or in part) be fulfilled by TUI Travel issuing the New TUI Travel Shares directly to TUI AG (performance by third parties pursuant to section 267 (1) of the German Civil Code (Bürgerliches Gesetzbuch; "BGB")); it will then not be necessary to initially issue New TUI Travel Shares to the Eligible TUI Travel Shareholders or to the Trustee FR:

11 In order to be able to issue the New Shares I, a corresponding increase of TUI AG's capital will be required. However, at the time of convocation of the TUI Extraordinary General Meeting the number of New TUI Travel Shares to be contributed as contribution in kind, and thus the number of New Shares I required, is not yet known. As at 12 September 2014, 1,133,842,328 shares (ordinary shares) of TUI Travel were outstanding with a nominal value of GBP 0.10 per share (ISIN GB00B1Z7RQ77) (the "TUI Travel Shares"). Of this volume, 609,120,138 shares are either held by TUI AG itself or by a company in which TUI AG holds a controlling or majority interest or in respect of which TUI AG or a company in which TUI AG holds a controlling or majority interest may control the attached voting rights (on the basis of a power of attorney or power to issue instructions or otherwise; TUI AG is also entitled to dividends distributed by TUI Travel in the proportion of its voting share. After the convocation of the TUI Extraordinary General Meeting and up to the Scheme Record Time, the number of TUI Travel Shares may still increase as a result of convertible bonds issued by TUI Travel. In more detail, TUI Travel issued a GBP 350,000,000 convertible bond due in October 2014, ISIN XS , (the individual notes issued under this bond also the "TUI Travel 2014 Bonds") and GBP 400,000,000 convertible bond due in April 2017, ISIN XS , (the individual notes issued under this bond also the "TUI Travel 2017 Bonds"). On certain conditions both the TUI Travel 2014 Bonds and the TUI Travel 2017 Bonds may be converted into shares in TUI Travel prior to the Scheme Record Time, so that these shares would then be cancelled, as Scheme Shares, in accordance with the Scheme in order for New TUI Travel Shares to be issued as consideration which will then be contributed as contribution in kind. In this context, a conversion of the TUI Travel 2014 Bonds into shares in TUI Travel is only possible before the Scheme Record Time, while a conversion of the TUI Travel 2017 Bonds into shares in TUI Travel may occur before, but also after the Scheme Record Time. As a result, the number of Scheme Shares and, consequently, the number of New TUI Travel Shares to be contributed as contribution in kind would increase accordingly. Measured by stock ratios as of 12 September, taking into account the terms of conversion for the TUI Travel 2017 Bonds, conversion is currently not reasonable in financial terms, so that it cannot be expected that the conversion right will be exercised up to the date of the Extraordinary TUI General Meeting. Following completion of the Merger, however, it is currently reasonable in financial terms and, based on unchanged market conditions, most likely that the relevant holders or creditors will convert their TUI Travel 2017 Bonds on account of a so-called change-of-control clause which is included in the terms underlying the TUI Travel 2017 Bonds and triggered by completion of the Merger. It should be noted that 50% of the TUI Travel 2017 Bonds are legally or beneficially held by or attributed to TUI AG. If the full or partial exercise of these conversion rights to the TUI Travel 2017 Bonds is timed such that shares in TUI Travel will be issued before the Scheme Record Time, these shares in TUI Travel that are owned by or held for the account of TUI AG will nevertheless not be subject to the provisions of the Scheme, i.e. they will not become Scheme Shares, and thus these shares will neither be contributed to TUI AG as contribution in kind nor cancelled in accordance with the Scheme in order for New TUI Travel Shares to be issued as consideration which will then be contributed as contribution in kind. To the extent that TUI AG or a third party acting for the account of TUI AG convert their TUI Travel 2017 Bonds into shares in TUI Travel only at or after the Scheme Record Time, the shares in TUI Travel to be created as a result of such conversion would not be covered by the Scheme for reasons of this timing alone. Taking this into account, the number of New TUI Travel Shares that can then be contributed to TUI AG as contribution in kind in accordance with the general meeting resolution proposed under agenda item 1 could be up to 669,850,099. Accordingly, a capital increase FR:

12 up to a maximum amount of EUR 683,265, is proposed to the general meeting under agenda item 1. In line with the corresponding provision in the resolution proposal, the capital increase against contributions in kind will be effected only to the extent required in order for TUI AG to acquire all New TUI Travel Shares in the context of the capital increase with the envisaged ratio. Furthermore, the subscription rights of the shareholders of TUI AG in connection with the capital increase are to be excluded because the New Shares I are exclusively intended to serve as consideration for the New TUI Travel Shares contributed as contribution in kind (on the exclusion of subscription rights see also 4.1 below). Once a resolution on the resolution proposal set out in agenda item 1 has been validly passed and the New TUI Travel Shares have been contributed to TUI AG as contribution in kind in the context of the capital increase proposed under agenda item 1, the implementation of this capital increase may be registered. As a result, all shares in TUI Travel will then generally be beneficially owned by TUI AG. After completion of the capital increase, the Eligible TUI Travel Shareholders will no longer hold stakes in TUI Travel but will instead be shareholders of TUI AG, in line with the shares received in accordance with the ratio. (b) Conditional capital increase for the purpose of granting subscription rights in connection with convertible bonds issued by TUI Travel The creation of new conditional capital against contributions in kind with a granting of subscription rights serves to prepare for the Merger. Among other instruments, TUI Travel issued the TUI Travel 2017 Bonds (see 2.2 (a) above). In the event of full or partial conversion of the TUI Travel 2017 Bonds at or after the Scheme Record Time, shares in TUI Travel that are issued as a result of such conversion are not covered by the Scheme and may therefore neither be contributed to TUI AG as contribution in kind on the basis of the capital increase resolved on under agenda item 1 nor cancelled in accordance with the Scheme in order for New TUI Travel Shares to be issued as consideration which will then be contributed to TUI AG as contribution in kind. In view of the aforesaid, conditional capital up to the amount of EUR 61,976, is to be created against contributions in kind in order to enable the contribution of the new shares in TUI Travel created by the conversion of the TUI Travel 2017 Bonds into TUI AG as contribution in kind at or after the Scheme Record Time. Holders or creditors of the TUI Travel 2017 Bonds (with the exception of those 50% of the TUI Travel 2017 Bonds which are held by TUI AG itself or by a company in which TUI AG holds a controlling or majority interest or in respect of which TUI AG or a company in which TUI AG holds a controlling or majority interest may control the attached voting rights) who exercise the right of conversion into shares of TUI Travel with the result that, for the purpose of fulfilling this conversion right, shares in TUI Travel (the "Converted TUI Travel Shares") are issued at or after the Scheme Record Time (the "Eligible TUI Travel Bondholders") will receive new shares in TUI AG (the "New Shares II") as consideration for the contribution of the Converted TUI Travel Shares as contribution in kind. To this end, the Executive Board of TUI AG grants corresponding subscription rights to the Eligible TUI Travel Bondholders in accordance with the resolution proposed under agenda item 2. Only the Eligible TUI Travel Bondholders are to be admitted for subscription of the New Shares II. The Eligible TUI Travel Bondholders' obligation to make a contribution in kind may in particular also be fulfilled by a transfer of the Converted TUI Travel Shares to TUI AG by a third party engaged by TUI Travel and acting as proxy for the respective Eligible TUI Travel FR:

13 Bondholder (or without further action following a statement by such third party) on the basis of a mandatory transfer article contained in the Articles of Association of TUI Travel in the version applicable on the relevant date. It is envisaged that a corresponding mandatory transfer article be included in the Articles of Association of TUI Travel in time for it to be binding on the holders of shares in TUI Travel issued from the Scheme Record Time and ensure a transfer of these shares in TUI Travel to TUI AG. The New Shares II are issued at the lowest issue amount within the meaning of section 9 (1) AktG (approx. EUR 2.56 per New Share II) and carry dividend rights for the first time for the entire financial year in which they are created. They will be issued to the Eligible TUI Travel Bondholders in exchange for Converted TUI Travel Shares at a ratio of 0.399: This means that for each New Share II 1/0.399, i.e. approx , Converted TUI Travel Shares are contributed by way of contribution in kind. However, no fractions of New Shares II will be issued. Therefore, the number of New Shares II issued in exchange for Converted TUI Travel Shares will be rounded down to a full number of New Shares II, with no compensation being provided by TUI AG for the contributed Converted TUI Travel Shares or fractions of Converted TUI Travel Shares that are not covered by a fraction of a New Share II due to rounding down at a ratio of 0.399: In line with the provision in the resolution proposed to the general meeting, the conditional capital increase will be effected only to the extent that the Eligible TUI Travel Bondholders have exercised their conversion right from the TUI Travel 2017 Bonds, exercise the subscription right in respect of New Shares II granted to them, Converted TUI Travel Shares are issued following the exercise of the conversion right, these are then transferred to TUI AG and New Shares II are required as consideration for these Converted TUI Travel Shares at the ratio and pursuant to the other provisions of the resolution of the general meeting. New Shares II may only be issued until the end of 31 December Since the TUI Travel 2017 Bonds will have become due by then, the resolution proposed under agenda item 2 will ensure that following the conversion all Eligible TUI Travel Bondholders will receive New Shares II and will consequently become shareholders of TUI AG. (c) New authorised capital with authorisation of the Executive Board to exclude shareholders' statutory subscription rights As a third capital measure in connection with the Merger, it is envisaged to create new authorised capital with an authorisation of the Executive Board to exclude shareholders' statutory subscription rights and to amend the Charter accordingly, in line with the resolution proposed under agenda item 3. TUI Travel granted its employees share awards under which the beneficiaries may receive shares in TUI Travel. This right to receive shares is based on certain programmes launched by TUI Travel, namely the Performance Share Plan, the Deferred Annual Bonus Scheme and the Deferred Annual Bonus Long-Term Incentive Scheme (the Performance Share Plan, the Deferred Annual Bonus Scheme and the Deferred Annual Bonus Long-Term Incentive Scheme jointly also the "Share Award Schemes"). To the extent that shares in TUI Travel were to be issued under the Share Award Schemes after the Scheme Record Time (the "Share Award Schemes Shares"), these would not be covered by the Scheme and would consequently not be contributed to TUI AG as contribution in kind in accordance with the resolution proposed under agenda item 1. Therefore the new authorised capital is to TUI AG to acquire the Award Schemes Shares and to grant new shares in TUI AG as consideration, the Executive Board of TUI AG is to be authorised, with the consent of the Supervisory Board, to increase the share capital of TUI AG once or several times until 27 October 2019 by issuing new registered shares (the FR:

14 "New Shares III") against contributions in kind by an amount not to exceed EUR 18,000,000. In this way, the Executive Board is to be enabled to acquire Share Award Schemes Shares and to grant New Shares III as consideration. The details of the capital increase from authorised capital and its implementation will be determined by the Executive Board of TUI AG with the consent of the Supervisory Board of TUI AG. This means in particular that the ratio is not yet determined in the resolution proposal. The TUI AG Executive Board currently expects, however, that the New Shares III to be issued against contributions in kind on the basis of the authorisation will be issued at a ratio equal to that stipulated in the resolutions proposed under agenda items 1 and 2. In any event, the New Shares III will not be issued at less than the lowest issue amount within the meaning of section 9 (1) AktG (approx. EUR 2.56 per New Share). Insofar as the acquisition by TUI AG of Share Award Schemes Shares occurs in the context of the capital increases proposed to the TUI Extraordinary General Meeting under agenda item 1 and 2, there is no need for the Executive Board to make use of this authorisation. This also applies if TUI Travel does not issue any further shares in TUI Travel on the basis of the Share Award Schemes after the Scheme Record Time. However, with this extensive authorisation, which may only be made use of with the consent of the Supervisory Board, it is ensured that TUI AG will be the beneficial owner of all shares in TUI Travel and that no new shares in TUI Travel will be created that cannot be acquired by TUI AG by way of a capital increase against contribution in kind. 2.3 Economic reasons for the Merger The Merger will be based in particular on the following economic considerations which were also reported in detail in the ad hoc notice as of 15 September (a) Creation of the World s Number One Integrated Leisure Tourism Business 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. 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. The TUI Group is among the most successful cruise operators. After successful implementation of the onetui AG programme for efficiency increase it has ambitious growth plans to double the size of its content. The TUI Travel Group operates an international leisure tourism business with a focus on Europe, with a portfolio of tour operator brands servicing more than 30 million customers. Having differentiated itself from the rest of the industry by continued development of unique holiday offerings, the enterprise's growth is focused on this field. The unique offerings are available exclusively through its own brands, distributed directly through its own channels with significant numbers of its customers flying on its modern holiday airline fleet. (b) Mainstream Tourism Business As a result of the Merger, the TUI Group will become a streamlined leisure tourism business which would enhance its growth and margin profile by vertically integrating the TUI AG hotel portfolio and cruise operations with the distribution capability of TUI Travel. The TUI Group will focus on broadening its customer offerings, leveraging its brands and implementing its unique proposition across much of the hotel portfolio, providing a superior FR:

15 experience to its customers. The resources available to the TUI 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 TUI Group's top line growth. A holistic end-to-end customer approach will be developed offering unique, high quality content from the strongest brands in tourism booking anytime, anywhere, any way driving further expected growth through lifetime customer value, building loyalty, retention and increased, long-term sustainable profit growth. Key to this is operating effectively in a digital age. As a result of the Merger, single solutions developed and deployed to many can remove long-term infrastructure cost and the Group therefore 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 it with friends and family and returning home to the suggestion for the next leisure travel experience from the Group every step of the way. In doing this, personal interaction on the ground at home, in the air and in the resort will provide considerable added-value expertise. (c) Non- Mainstream Tourism Businesses Since in the opinion of the Executive Board the future of the TUI Group will be its Mainstream Tourism business, following the Merger the Executive Board of TUI AG will focus on unlocking value from its other non-mainstream assets. The current Online Accommodation and Specialist & Activity businesses of TUI Travel will operate separately from the mainstream tourism business and opportunities to maximise their value for the TUI Group will be actively pursued. The stake in Hamburg-based Hapag-Lloyd AG held by TUI AG, comprising approx. 22% of the share capital, will be held for sale, resulting in the TUI Group becoming a pure play integrated leisure tourism business following the sale of the stake in Hapag-Lloyd AG. (d) Significant Shareholder Value Creation by delivery of 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 Executive Board of TUI AG believes that the principal sources of financial benefits will be as set out below. TUI AG provided details in this regard in its ad-hoc notification of 15 September A summary of the key points is provided below (see also 3.2 (d) below). As a direct result of the Merger, the Executive Board of TUI AG believes that the following benefits will arise: (A) Recurring cost savings of at least EUR 45 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 FR:

16 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 EUR 45 million are expected to be incurred to achieve these savings. (B) 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 tax calculations for financial year 2012/13 a cash tax benefit of EUR 35 million would have been achieved had the Merger of TUI AG and TUI Travel been achieved in that year. For the financial year 2012/13, this cash tax benefit would have effectively resulted in a decrease in the underlying effective tax rate on a pro-forma basis of around 7 percentage points from 31% to around 24% (calculated based on the underlying profit before tax, excluding separately disclosed items, acquisition related expenses and impairment charges). In addition to the benefits arising as a result of the Merger outlined above, the following net benefits have been identified by the Executive Board of TUI AG. These net benefits could have been achieved independently of the Merger but the post-merger strategy now provides an opportunity to optimise the group s operating structure and achieve these benefits. (C) 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 cost savings of at least EUR 20 million (after deduction of associated costs) per annum have been identified as further described below: o o o o These cost savings mainly comprise savings from the consolidation of overlapping functions, property costs and travel expenses. At least EUR 30 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 EUR 10 million per annum. Estimated one-off cash costs of approximately EUR 76 million are expected to be incurred to achieve these savings, which includes EUR 19 million of capital gains tax from the proposed corporate restructuring and indirect taxes. As a direct result of the Merger, in addition to the benefits outlined in paragraphs (A), (B) and (C) above, the Executive Board of TUI AG believes the Merger could create additional commercial benefits and growth opportunities as follows: FR:

17 (D) Top line growth is expected to be enhanced by commercial benefits such as accelerated broadening of the portfolio of unique holiday experiences, increased occupancy levels in existing hotels, integrated occupancy management and the future expansion of TUI AG s core hotel and cruise activities. Based on internal TUI AG calculations, each 1 percentage point increase in occupancy levels can increase the EBITA result by approximately EUR 6.1 million. Occupancy in the vertically integrated Magic Life Clubs (excluding Egypt) of TUI Travel in the current financial year 2013/14 is five percentage points higher than the occupancy reported by TUI AG's Hotels & Resorts business in the financial year 2012/13. Aside from the one-off integration costs set out above, no material dis-synergies (whether or not recurring) are expected in connection with the benefits set out in paragraphs (A), (B) and (C) above. Statement with respect to the City Code on Takeovers and Mergers in the United Kingdom (the "Code"): For the purposes of the Code: (1) The members of the Executive Board of TUI AG and the expected future Executive Board members (see 2.4 (c) above) are responsible for the statements set out in paragraphs (A), (B) and (C) above. The members of the Executive Board of TUI AG have received confirmations from each of PricewaterhouseCoopers LLP, Deutsche Bank AG, London Branch, Greenhill & Co. Europe LLP and Lazard & Co., Limited that their respective reports produced in connection with the statements set out in paragraphs (A), (B) and (C) above, which were set out in Appendix I to the ad hoc announcement of TUI AG on 27 June 2014 and in Appendix V to the ad hoc announcement of TUI AG on 15 September 2014 (as applicable), continue to apply. (2) More background information on the statements in paragraphs (A), (B) and (C) above, including the bases of belief supporting those statements, is contained in Appendices IV and V to the ad hoc announcement of TUI AG on 15 September (3) With respect to the Code, no statement in paragraphs (A), (B), (C) and (D) above is intended as a profit forecast or estimate for any period and no statement in paragraphs (A), (B), (C) and (D) above 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) With respect to the Code, the statement in paragraph (B) above should not be construed as a forecast of the tax benefits achievable as a result of the Merger. The achievement of such a saving is reliant on the group continuing to achieve sufficient taxable profits in the German jurisdiction. (e) Cash flow and dividend After the Merger the TUI Group will benefit from a stable balance sheet situation as well as from an increased free cash flow, both of which will offer flexibility. The TUI Travel interim dividend of 4.05 pence per TUI Travel share previously announced by TUI Travel will become payable on 3 October In addition, TUI Travel will, immediately prior to completion of the merger 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 of the merger 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 EUR 0.33 per TUI AG Share. The anticipated dividend of TUI AG would represent an equivalent amount to the originally anticipated final FR:

18 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 Shares I and II, see 2.2 above). TUI AG and TUI Travel each have confirmed 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 of the Merger. Following completion of the merger, TUI 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 TUI Group develops in line with expectations, TUI 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 TUI 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. 2.4 TUI AG following completion of the Merger (a) General Following completion of the Merger, TUI AG will be the beneficial owner of all shares in TUI Travel. The TUI Group will be incorporated and headquartered in Germany and will retain a two-tier board structure. The TUI Group and operational management will continue to be located in multiple locations as the TUI Group continues to draw on the expertise across its markets and the TUI 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. (b) Listing; dealings and settlement of TUI AG Shares; Indexation and FTSE Index Series inclusion 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 created by way of the implementation of the Merger 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 FR:

19 The decision on admission of these 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 these 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. 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. (c) Corporate Governance TUI AG intends to adhere to both the UK Corporate Governance Code and the German Corporate Governance Code to the extent practicable. Following the Merger, TUI AG will be subject to the shared jurisdiction of the UK Takeover Code and applicable German takeover law. Even after completion of the Merger TUI AG will have a two-tier structure comprising a Supervisory Board and an Executive Board. Within this framework the following changes will be made: (i) Composition of Supervisory Board and formation of Integration Committee In the context of the Merger TUI AG will propose to its shareholders to increase the number of Supervisory Board members from 16 at the time of convocation to 20, and to amend the Charter accordingly. The resolutions required for this purpose are to be passed by the TUI Extraordinary General Meeting under agenda item 4. Once the resolutions have taken effect, the Supervisory Board will comprise ten members representing the shareholders and ten employee representatives. 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. In order to permit the election of Sir Michael Hodgkinson as second deputy chairman, a corresponding clarification and amendment of the Charter will be submitted to the TUI Extraordinary General Meeting. Apart from that, the resolution proposed under agenda item 5 states which FR:

20 Supervisory Board members will withdraw from their office upon completion of the Merger and how the Supervisory Board will be composed after the corresponding elections by the TUI Extraordinary 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. (ii) Composition of the Executive Board, allocation of responsibilities, chair Following the Merger the Executive Board of TUI AG as the parent company of the TUI Group will be composed of equal numbers of TUI AG and TUI Travel representatives. Apart from Peter Long and Friedrich Joussen, the following individuals are to be appointed to the Executive Board, with the stated areas of responsibilities: Johan Lundgren Deputy TUI 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; Horst Baier CFO TUI Group; Sebastian Ebel HR/Arbeitsdirektor and in parallel responsible for all platforms and processes of the Combined Group 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 of the Merger having taken place. Peter Long and Friedrich Joussen will become joint Chief Executives of TUI Group on completion of the Merger until Peter Long's accession to the Supervisory Board of TUI AG becomes effective. Friedrich Joussen will lead TUI Group as sole CEO following Peter Long's accession to the Supervisory Board of TUI AG, which is anticipated to be in February Until this date they will alternate in chairing the meetings of the Executive Board of TUI AG. Following completion, it has been decided that TUI 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. (d) Shareholder structure The shareholder structure before and after completion of the Merger will be as shown in the charts below. In this context, it should be noted that (i) "private investors" includes all individuals holding direct interests in TUI AG and (ii) Alexey Mordashov does not hold his interest in TUI AG directly but indirectly via affiliated companies that are fully controlled by him FR:

21 Shareholder structure before completion of the Merger (figures most recently compiled in August 2014): Expected shareholder structure after completion of the Merger (taking into account full dilution): (e) Business development The expected business development after completion of the Merger has been described in the section dealing with the economic reasons for the Merger; reference is made to 2.3 above FR: