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Last Updated: Monday, 22 August 2005, 09:35 GMT 10:35 UK
TUI to buy shipping firm for $2bn
Two young boys wave at a Hapag-Lloyd container ship
TUI is optimistic about the outlook for both shipping and tourism
Shares in German travel-to-shipping company TUI fell about 2% on Monday after it agreed to buy CP Ships of Canada for $2bn (1.1bn; 1.7bn euros).

Already Europe's biggest travel firm, TUI is looking to increase the size of its container shipping operations.

The company said the acquisition would turn its Hapag-LLoyd business into one of the world's five biggest shippers.

TUI said it would sell shares worth 1bn euros (677m; $1.1bn) to existing shareholders to finance the cash deal.

'Compelling opportunity'

The bid values CP Ships' shares at $21.50 each, 10% more than Friday's closing share price.

Once they have merged, the two firms will have a fleet of 139 ships, with another 17 already ordered.

They also will have a stronger presence in the North Atlantic, Asia Pacific and South America.

"Our enlarged shipping business will be well positioned to take advantage of the strong long-term growth dynamics in the container shipping industry," TUI's chief executive Michael Frenzel said in a statement.

"This is both a compelling financial and strategic opportunity for us."

The company said that it expects to see growth in both its tourism and shipping businesses.

TUI tweaked its strategy regarding Hapag-Lloyd last year and cancelled plans to sell as much as 49.9% of the company to investors citing weak market conditions.

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