German travel group TUI and its British subsidiary TUI Travel have finalised terms on creating the world's biggest tourism operator, the pair said today. 

"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. 

"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.