MyTravel Group, a FTSE 250-listed travel company that operates an airline, a retail arm and a tour operator, has agreed to a merger of equals with Thomas Cook, its privately owned Germany-based rival.

The new company will retain the Thomas Cook name, be listed in London and have its headquarters in the U.K. Thomas Cook's owner, KarstadtQuelle (other-otc: KAR - news - people )--the department store operator owned by billionaire Madeleine Schickedanz - will hold a 52% stake in the combined company, while MyTravel will hold 48%, the companies said in an announcement.

The companies said the deal will yield savings of £75 million ($146 million) per year. Thomas Middelhoff, chief executive of KarstadtQuelle and chairman of Thomas Cook, will chair the combined group and Michael Beckett, MyTravel's chairman, will be deputy chairman of the merged entity.

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