Webjet expands with online purchase
The managing director, John Guscic, said the acquisition of Zuji would allow Webjet to "substantially expand" its presence, particularly in Asia, and help fast-track its hotel contracting and online distribution.
Zuji, a subsidiary of Travelocity, is the biggest online travel agency in terms of air ticket sales in Hong Kong and Singapore. It generated $US31 million in revenue this year.
An RBS Morgans analyst, Belinda Moore, said the purchase of the Zuji operations appeared to be a "very attractively priced" acquisition of a well-known online travel brand.
"Zuji offers significant synergies and gives Webjet a platform into Asian markets - it all makes strategic sense," she said. "This is a key platform of growth for the group."
Webjet will raise $25 million to fund the purchase of Zuji via a placement of about 6.9 million new shares.
The placement will be offered to institutional and "sophisticated investors" at a fixed price of $3.60 a share, which is a 6 per cent discount to Webjet's closing price on Tuesday.
The Zuji purchase is subject to conditions, including regulatory approval, and is expected to be completed in the first half of next year.
Webjet will incur $5 million in transaction and restructuring costs from the purchase.
The company spooked investors last month when it warned of "very low growth levels" in the leisure travel market over the prior four months. Its share price sank by 15 per cent following the disappointing update on trading conditions but has recovered some lost ground.
Frequently Asked Questions about this Article…
Webjet announced it will buy Zuji's online travel operations in Australia, Hong Kong and Singapore for US$25 million (about $23.7 million) as a move into Asia's travel market.
According to Webjet's managing director John Guscic, the Zuji purchase will substantially expand Webjet's presence in Asia and help fast-track its hotel contracting and online distribution capabilities.
Zuji is a subsidiary of Travelocity and is the biggest online travel agency by air ticket sales in Hong Kong and Singapore. The Zuji operations generated about US$31 million in revenue this year.
Webjet plans to raise $25 million by placing about 6.9 million new shares to institutional and "sophisticated investors" at a fixed price of $3.60 per share, which was a 6% discount to Webjet's closing price on the referenced Tuesday.
The Zuji purchase is subject to conditions, including regulatory approval, and was expected to be completed in the first half of the following year.
Yes — Webjet said it will incur about $5 million in transaction and restructuring costs related to the Zuji purchase.
RBS Morgans analyst Belinda Moore described the purchase as "very attractively priced," noting that Zuji offers significant synergies and provides Webjet with a platform into Asian markets that makes strategic sense for growth.
Investors should note Webjet warned of "very low growth levels" in the leisure travel market over the prior four months, which caused the share price to fall about 15% after the trading update; the shares have since recovered some ground. The planned $25 million placement and the 6% share-price discount may also affect existing shareholders.
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