The contrast tells a story – there’s travel industry leader Flight Centre battling a profit downgrade and the impact of new investment to build future business and the shares have fallen 7% since the update on May 23.
And there was its online rival Webjet which reaffirmed its previous buoyant forecast on May 20, and the shares have risen just over 7%. And Webjet yesterday added between it and Flight Centre by revealing a rights issue to fund a major expansion into the New Zealand travel sector.
Webjet put its shares into a trading halt after revealing it was paying $80.3 million ($NZ85 million) for New Zealand-based travel group Online Republic.
The deal involves both cash and scrip, with Online Republic’s owners to receive Webjet shares for 22% of the purchase price. The remainder, around $62.6 million, will be in cash.
Webjet has launched a $72 million rights issue to fund both the Online Republic purchase as well as what it said yesterday were “other growth opportunities”.
Online Republic is a NZ-based global travel group that focuses on car and motorhome rentals as well as cruise bookings. It was founded in 2004 and currently has over $200 million in annual sales.
“Online Republic is highly complementary to Webjet’s existing portfolio, enabling our business to further expand its offering in car rental and cruise and enter the high-growth motorhome rental market,” Webjet managing director John Guscic said in yesterday’s statement.
“We see significant opportunities in applying the benefit of our marketing and branding expertise, together with our scale, to drive market share gains across Online Republic’s respective segments,” Mr Guscic said.
“This is an exciting opportunity for Webjet, enabling us to broaden our product offering and deepen our footprint, enhancing our proposition for our customers.” Webjet says that Oneline Republic already gets 90% of its bookings outside of NZ.
The trading halt is scheduled to remain in place until Wednesday when the institutional component of the equity raising is tipped to be finalised. Webjet shares last traded at $6.31 at the close last Friday (Flight centre shares were last at $31.11).
For the year to March, Online Republic generated total transaction value of $NZ229 million ($A216 million), revenue of $NZ40 million ($A38 million) and EBITDA (earnings before interest, taxes, depreciation and amortisation) of $NZ$12 million ($A11 million).
In the latest half year, Webjet reported a 27% rise in revenue to $A73.8 million. Net profit after tax was $A10.7 million, up 17.5%.
