Tui drops plan to merge with its UK arm A cost-saving merger between Germany's Tui and its UK-listed Tui Travel subsidiary has failed to make it off the drawing board. Tui on Wednesday said it did not intend to make an offer for Tui Travel, the largest tour operator in Europe by sales. It already owns slightly more than half the company. The independent directors of Tui Travel had announced a week earlier that they had received an approach from Tui that could result in a all-share merger of the two companies without Tui having to pay a premium for taking full ownership. Tui on Wednesday said its decision not to proceed was "based on the assessment that a share-based transaction at current exchange ratios is not in the interest of Tui shareholders." The idea of combining Tui and Tui Travel had been raised in the past. It resurfaced as the German parent company prepares for a change of chief executive, with Michael Frenzel due to stand down next month after 19 years. For Tui Travel's independent directors, key issues had included the future of its chief executive Peter Long, whether a combined company would be headquartered in Germany or the UK, and where it would be listed. Tui Travel was formed through the merger of Tui's tourism division and First Choice Holidays in 2007. Tui runs hotels and cruises as well as holding a controlling stake in Tui Travel and a minority stake in Hapag-Lloyd, the container shipping group. Klaus Mangold, Tui supervisory board chairman, said last year its structure was "not optimal" and lamented the conglomerate discount at which Tui shares traded. Tui had until February 13 to bid or confirm that it was walking away for at least six months under UK takeover rules. Shares in Tui Travel fell 3.9 per cent to 280.8p in early morning trading in London on Wednesday.