Michael Frenzel, chief executive of Tui, appears to have scored another victory over an investor keen to oust him, by winning Russian billionaire Alexei Mordashov as a shareholder for the German travel and shipping group.
Mr Frenzel said the 3 per cent stake held by Mr Mordashov, who controls Russian steelmaker Severstal, was the foundation of a “partnership” that would “open new opportunities” in Russia and increase the value of Tui stock.
S-Group Capital, an investment company acting for Mr Mordashov, said the stake was “a first step” to establishing closer ties with the company’s management – a statement Tui advisers saw as a hint that the Russian’s stake could grow.
The statements indicated that Mr Mordashov must be counted as the newest member of a group of pro-Frenzel shareholders that Tui officials in September estimated to control upwards of 20 per cent of the company’s stock.
The move is the latest in a series that seem to have put US investor Guy Wyser-Pratte on the back foot. The activist said in September that he had taken a 1 per cent stake in Tui and called for Mr Frenzel to be ousted as its chief.
But Tui’s non-executive directors ignored this call at the start of this month by extending Mr Frenzel’s contract to 2012. This came after good third-quarter results, which saw the group hint at a resumption of dividend pay-outs.
Mr Frenzel’s dual-focus strategy to maintain Tui’s interest in tourism and shipping hit trouble last year when competition from internet travel agencies and falling shipping rates pushed the group into the red.
But cost cuts, coupled with the effects of sound economic growth and the takeover of the UK’s First Choice holidays this year, have in put the Hanover-based company on a more solid footing once again.
Nonetheless, Mr Wyser-Pratte has criticised Mr Frenzel’s 13 years at the helm for destroying shareholder value. He has threatened to convene shareholders in order to replace non-executive directors who choose senior managers.
Mr Wyser-Pratte said on Monday that he would announce his next move before the end of the year.
“I know how I want to react,” he told the Financial Times, although the US investor refused to give details of what this might involve.
He suggested that Mr Frenzel’s hunt for friendly shareholders had been supported by Gerhard Schröder, the former Social Democratic chancellor of Germany with close Kremlin ties, whom Mr Frenzel has known for years.
Mr Wyser-Pratte blames Tui for losses he incurred after investing in Babcock-Börsig, a Tui unit that collapsed in 2002.