“The merger will result in the creation of the world’s number one integrated leisure tourism business… with enhanced long-term growth prospects,” a joint statement from the two companies said.

Today’s news follows an announcement in June that had revealed a merger in principle.

Following the all-shares merger, the combined group will be domiciled in Germany and have a premium listing on the London Stock Exchange.

Existing TUI Travel shareholders will own 46% of the new company, with the remainder controlled by TUI stakeholders.

The merger is expected to eventually deliver cost savings of at least €45m a year, the statement added. The combined group will have a market value of about €6.5 billion.

“The potential cost savings are significantly higher than expected at the start of the negotiations,” said TUI chief executive Friedrich Joussen.

RTE News

“The new TUI will definitely be a truly international group and thus also one of the most international employers in Europe,” he added.

One-off costs as a result of the merger are estimated at €45m, the statement added.

Joussen and TUI Travel chief executive Peter Long will be joint CEOs of the new group until February 2016, at which point Joussen will become sole head.