The iconic London Stock Exchange (LSE) is bracing for a potential New Year nightmare scenario – the delisting of TUI, Europe’s leading tour operator.
In a shocking announcement that stunned investors, TUI revealed it has been approached by shareholders to discuss whether remaining dual-listed on the LSE and Frankfurt Stock Exchange is in the “best interest of shareholders.”
The very thought of TUI abandoning the LSE has sparked pandemonium in the City of London. TUI calmly noting a “significant” migration of trading from London to Frankfurt over recent years has only fanned the flames of fear.
Once the crown jewel of London’s global financial hub, the LSE is under siege. The potential TUI withdrawal would deliver yet another crushing blow to its reputation and stature.
Over the past 18 tumultuous months, several high-profile companies have turned their backs on the LSE, opting to list primarily on Wall Street instead. Most gallingly, Softbank-backed semiconductor powerhouse ARM Holdings departed the LSE for New York in a body blow to Britain’s tech sector.
Now, travel behemoth TUI looms as the next domino to fall. Valued at €3.2 billion, TUI is dual-listed in London and Frankfurt and owns over 400 hotels, 16 cruise liners, 5 airlines, and 1,200 travel agencies.
Should TUI quit the LSE, experts believe companies may view the move as opening the floodgates. What was once inconceivable could become an exodus.
According to Victoria Scholar, Head of Investments at Interactive Brokers, “A TUI delisting would be a major blow to the LSE, which has been grappling with an exodus of companies, as well as the weak performance for London-listed stocks.”
Underscoring Scholar’s fears, Amsterdam and Paris are aggressively trying to surpass London as Europe’s preeminent financial hub. A rampant TUI withdrawal would deal a hammer blow to London’s aspirations of fending off its rivals.
Rumors of a potential shareholder vote on delisting at TUI’s February Annual General Meeting has rattled LSE officials. For decades the envy of continental Europe, the LSE is facing a nightmare scenario of its own making.
Once possessing an ironclad monopoly over Europe’s financial markets, the LSE is witnessing its empire crumble before its very eyes.
The vastly improved liquidity and “clearer investment profile” of the Frankfurt Stock Exchange are proving a tantalizing proposition for TUI. Reduced expenses from a unified Frankfurt listing is also appealing, especially with TUI sitting on €2.1 billion in debt.
And yet, unlike many firms abandoning London, TUI is thriving financially.
In its 2022 fiscal year, TUI generated record revenues of €20.7 billion, a 25% year-on-year explosion. Underlying operating profits more than doubled to €977 million.
TUI CEO Sebastian Ebel optimism about significant future growth in market share, sales, and profits makes the potential delisting even more perplexing.
Why fix what isn’t broken?
The answer, it seems, lies in the power dynamics between Deutsche shareholders and the LSE. For TUI’s German owners, the LSE is an afterthought not worthy of their attention.
For the LSE, however, the delisting of Europe’s leading tour operator would be a catastrophic event to begin the New Year. It would also mark one of the final nails in the coffin of Brexit Britain’s global financial dominance.
The nightmare scenario that was once merely a bad dream now edges frighteningly close to reality. As the clock strikes midnight on New Year’s Eve, the LSE may have already received an omen of its challenging 2023 ahead.
